Page 11 - FSUOGM Week 50 2021

FSUOGM NEWS IN BRIEF FSUOGM

DTEK Oil & Gas produced 1.88 conducting the investigations based on the made a decision to transfer the clients of
the last hope supplier to the base tariff of
leaked information.
bcm of natural gas in 11M21 trouble for several years. In June 2020, the Naftogaz of Ukraine. This will allow 350,000
The Makhlai family has been in legal
households to pay UAH7.96 ($0.3) per cubic
Natural gas production at Ukraine’s son Sergei Makhlai was named as a defendant metre (pcm).
largest private producer DTEK Oil & Gas in a case where he was accused of ordering This was reported by RBK-Ukraine with
(DTEKOG) was 1.88bn cubic metres (36,800 the payment of a $1.2mn bribe to judges of reference to the press service of the NEURCU
barrels of oil equivalent per day) in 11M21, Russia’s Supreme Court to overturn a decision According to NKREKU, today the supplier
which is 2% more than in the full year 2020, that would have seen the recovery by the state of the “last resort” provides natural gas to
according to its press release published on of substantial unpaid taxes. more than 347,000 household consumers
December 8. Bribery charges were brought against from different regions of Ukraine and now
Analysts at Concorde Capital are Alexander Popov, the former CEO of there is a tendency of a rapid rise in prices for
increasing the estimate for DTEK Oil & Gas’ Togliattikhimbank, which is solely owned by natural gas.
2021 natural gas production to 2.04-2.06 bcm Sergei Makhlai in a case widely seen as one of Earlier, the Naftogaz Ukrainy Group of
in 2021 (36,600-36,900 boepd), or 11-12% the biggest ongoing corruption investigations Companies offered to automatically transfer
more year on year. in Russia. all customers to the basic annual tariff
Sergei Makhlai was also at the centre (UAH7.96). Such a solution for residential
of a separate criminal investigation customers who did not choose a market
that culminated in July 2019 with the supplier and receive gas from a supplier of
Pandora Papers reveal Komsomolsky District Court of Togliatti, “last resort” became possible thanks to the
finding Sergei Makhlai, his father Vladimir
adoption of a law on the introduction of
Makhlai family hidden Makhlai, who was previously chairman of the metering and calculations on the volume of
board at ToAZ, and three other individuals
gas in energy units on the natural gas market.
ownership schemes guilty of fraud. The court found that the NEURCU regarding the connection of all
GC “Naftogaz of Ukraine” applied to
group has siphoned off a total of RUB84bn
Russian father and son chemical industry ($1.4bn) from ToAZ through related-party household customers of the PIP on the basis
tycoons, Vladimir and Sergei Makhlai transactions defrauding the company and its of the basic annual offer.
who have been accused of defrauding their minority shareholders in a transfer pricing Recall that the gas supply company
shareholders used New Zealand-based scheme using the Swiss trader, Nitrochem Naftogaz of Ukraine, which acts as a supplier
trusts to hide away sales revenues and assets Distribution AG, controlled by the Makhlais’ of last resort (PPN), set the price for gas for
siphoned from Toglittiazot (Toaz), a major Swiss partner Andreas Zivy. None of the the population at UAH46.7 ($1.74) pcm on
Russian producer of ammonia, the Pandora Makhlais were jailed as they had already fled December 2, 2021. Since December, prices
Papers revealed, as reported by the New the country and now live in self-imposed have been set daily according to a formula
Zealand Herald. exile. Their sentences of eight and a half to approved by the Cabinet of Ministers. On
The Makhlais have been locked in a long- nine years in jail were imposed in absentia. December 8, the price was UAH46.2.
standing legal dispute with their shareholders In addition, Sergei and Vladimir Makhlai
who have accused the pair of stripping TOAZ were stripping ToAZ of its production assets.
of profits in a transfer pricing scam and also Using Togliattikhimbank, an ammonia
selling production assets to related parties at production unit worth RUB10bn ($322m European gas storage falling
knockdown prices. at the 2010 exchange rate) was sold for
The Makhlais were convicted by a Russian just RUB100mn ($3.2m). ToAZ also sold a fast
court of fraud in 2019 and sentenced to 8-9 methanol production facility with an annual
years in jail and ordered to pay compensation capacity of 450,000 tonnes per year (tpy) for a Gas storage in Europe continues to fall at
to the shareholders, but had already fled the paltry RUB132mn ($4.3m), inflicting financial worrying rates, suggesting storage levels
country and now live in self-imposed exile. damage on ToAZ exceeding RUB200mn. will drop to their lowest level in ten years of
Vladimir is reportedly living in London. Both facilities were sold to Tomet LLC, a firm around 10% by the end of the heating in the
Sergei has taken up American citizenship and controlled by Andreas Zivy. last week of March.
now goes by the name George Mack. He is In a statement after the 2019 sentencing, Storage levels of gas peaked this year at a
estimated by Forbes to have a net worth of ToAZ called the court’s decision “groundless level of 77.5% on October 22 when European
$1bn. The TOAZ case is widely seen as one of and absurd” and blamed the proceedings tanks held 864.8 TWh worth of gas, according
the largest corruption cases in Russia, as New on a “long-lasting corporate conflict” with a to AGSI+ aggregated gas storage inventory –
Zealand Herald reports. minority shareholder. the lowest level in volume terms since 2013
More details how the scams were Documents obtained by the New Zealand and its lowest level in percentage terms for a
organized were revealed in the Pandora Herald included internal records from the decade.
Papers recently, one of the largest dumps of New Zealand branch of Asiaciti Trust, which With November already the coldest in five
financial transactions ever. More than 12mn administered a trust set up by the Makhlais to years Europe has already draw significant
documents from 14 service providers that control their shares in ToAZ. amounts of gas as the heating season gets
set up and manage companies and trusts under way and storage levels have fallen to
in low-tax jurisdictions around the world 64% as of December 8 – the same level as of
were leaked to the International Consortium Ukraine reduces domestic January 13, 2020.
of Investigative Journalists, a non-profit Last year storage peaked on October 11,
network of investigative reporters based in gas tariffs when the tanks were 95.8% full following
Washington, D.C. The New Zealand Herald a mild winter in 2019, so not only are gas
was one of a dozen top newspaper partners in On December 9, the National Commission for storage depletion levels running about a
the Pandora Papers collective that have been Energy and Utilities Regulation (NKREKP) month ahead of last year, but last year tanks

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