With a helping hand of its prime minister Arseniy Yatsenyuk, Ukraine has plunged into another gas scandal trying to prove to everyone that it is able to do without the Russian gas. On July 17, after his trip to U.S., Yatsenyuk said in the parliament: “The American company Frontera will begin building the LNG terminal and begin supplying natural gas to Ukraine (10 billion cubic meters – one fourth of the country’s consumption) through the construction of the LNG terminal. The national oil and gas company Naftogaz and Frontera Resources signed the memorandum of understanding at the U.S.-Ukraine business forum in Washington at the beginning of the week in Washington. This document will make a breakthrough in Ukraine’s efforts to raise investments in economy and media have caught up the news. However, this story is turning into a scandal resembling the one that happened with the project of LNG-terminal under Viktor Yanukovych.
The point is that the American company is not engaged in the construction of terminals that process liquefied gas. Frontera said the document signed with the Ukrainian state monopoly was just a memorandum of understanding concern possible supply of gas from Georgia, which is not likely to be implemented within the coming years. Last year, the U.S. companies recovered only 5 million cubic meters of gas from the scanty gas deposits of Georgia. Kiev alone consumes such volume of gas in a day in summer. As to Naftogaz-announced 300 billion cubic meters of proven reserves in Georgia, they proved just inferred reserves that are yet to be confirmed after large-scale drilling activities that will cost several dozens of millions of dollars. Frontera Resources have no such possibilities. Last year, the proceeds of that small company totaled $6 million and it operated at $12 million loss.
Therefore, Yatsenyuk’s loud statements were nothing but populism that looked to justify his failed trip to USA and Canada, as he did not find any solid investors for Ukraine that is on the verge of bankruptcy. One can get an impression that Kiev failed to find anything better than the technologies of populism – something that once Yanukovych’s government burnt fingers on. To recall, in 2012, Ukraine announced a historical deal worth one billion dollars that would make the country less dependent on the Russian gas. Then, in the presence of Prime Minister Nikolay Azarov, Minister for Fuel Yuri Boyko, Head of the State Agency for National Projects Vladislav Kaskiv and Gas Natural Fenosa, Spain, signed an agreement of investments and construction of LNG-terminal on the Black Sea shore – exactly the same as the current one. However, it turned out that the Company has no information on the agreement. As to the Company’s representative Jordi Sarda Bonvehi that signed the agreement, he proved an ordinary ski instructor who is supposed to have been involved into the trick by a Ukrainian official for a good honorarium. Then, the world media mocked Ukraine. Now, they will probably try to close eyes on Ukraine’s populism. Yet, for the business that plays no geopolitical games, it will become another warning not to deal with the incumbent authorities in Ukraine.
Mikheil Saakashvili, the ex-president of Georgia may be behind the construction of the terminal in Odessa region which he is governing now. Frontera Resources, U.S., has announced its interests in the Black Sea region, especially in Georgia. The Company’s leadership almost fully consists of Georgians, which make one think that “U.S. gas suppliers” have certain relation to Saakashvili who has been using the technologies of Georgian populism on the Ukrainian soil for a long time already.