Firm of two employees to ensure Ukraine’s gas independence

A new gas scandal is maturing in Ukraine. A company of two employees and statutory capital of 74,000 hryvnias (183,000 rubles) has actually won the largest in the country’s history tender for drilling of wells on the gas fields of Ukrgazdobycha state-run company. Pivnichgazresurs LLC has demanded 2.1 billion hryvnias (5.25 billion rubles) for the construction of 90 wells on 11 gas fields. It was 6-fold less than the state-run company anticipated it would be. Actually, the private company has overrun its rivals. If it is announced the winner, it will have to ensure Ukraine’s gas independence for the coming 4 years, when, as Energy Minister of Ukraine Igor Nasalik said, the country will increase gas recovery by 6-7 billion cubic meters. They plan to achieve such results through drilling 430,000 meters of wells on the deposits of the country’s largest gas company. Ukrgazdobycha LLC accounts for 75% of gas recovery in Ukraine.

Yet, the loud tender might be another speculation. According to YOUCONTROL, Pivnichgazresurs LLC is not engaged in drilling. It is formally engaged in gas sale through gas distribution pipelines, wholesale trading in fuel, and construction. Besides, the firm was registered 7 years ago and has just two employees and the statutory capital of 74,000 hryvnias. And it is only part of the story. After “maidan,” the National Committee regulating the energy sector did not provide the firm with a license for gas supply, since they found no one in the firm’s office at its legal domicile address. Moreover, according to Nefterinok magazine covering oil market news, during the last two years, Pivnichgazresurs was involved in 10 criminal proceedings.

Experts say it can be a shell company that will try to earn on hiring other companies to carry out drilling. However, the offered dumping bid will hardly let them fulfill their work timely and properly, says Yuri Korolchuk, a Ukrainian expert in energy.

“The bid price that is 6-time lower than the tender price may indicate that the equipment to be used for drilling will be either written-off or unsafe. Therefore, it is not hard to guess what quality of work it will be. The problem is that Ukrainian taxpayers will have to pay for the consequences of such decisions of innovator-managers,” the experts says in a Facebook post. He has suspicions that the tender speculation could not be a success, unless it was backed by the Ukrgazdobycha leadership, and that saving of funds is just disguise.

In response, Larisa Polischuk, Spokesperson of the state-run company, responded to the post writing that it is necessary to wait under the winner is announced. She is right that there is no official decision yet, but the main criterion of victory in Ukrgazdobycha’s tender is price, as ProZorro public procurement website says.

If Pivnichgazresurs is not declared as the winter, the next potential winner will be Victorious Inc. that made a bid 4 times lower than the tender price was. Note that the firm has the same address as Pivnichgazresurs LLC in Kiev, and is engaged in construction. According to Yuri Korolchuk, both the firms have the same owner. The only difference between them is the staff size: 30 vs. 2 employees.