Gazprom shadow falls over Hungary
By Roman Kupchinsky
Russian energy giant Gazprom may be preparing to take over a large part of the
Hungarian domestic gas distribution network. A highly opaque deal is in the
works as a result of which Hungary's energy security could be threatened.
On April 28, Emfesz KFT, a major Hungarian gas distribution company owned by
Ukrainian businessman Dmytro Firtash, announced that it will stop importing gas
from RosUkrEnergo (RUE), a company based in Zug, Switzerland, and will instead
buy gas from an unknown company, RosGas AG, also located in Zug.
An Emfesz press release claimed that: "RosGas is a company in Gazprom's network
of business interests." Furthermore, the press
release stated that: "The new gas acquisition system of Emfesz is independent
of Ukraine. Gazprom, whose interest is to keep Emfesz consumers supplied with
gas, has played a role in shaping the system. The supply of all Emfesz's gas
consumers is continuously guaranteed and the fact that RosGas will be the gas
provider of Emfesz involves no perceptible change for the latter's customers."
Emfesz, the second-largest Hungarian gas distributor which imports 3 billion
cubic meters annually, was forced to turn to another middleman for its gas
supplies after RUE was removed from the Ukrainian - Central Asian gas trade in
January. However, the owner of Emfesz, Dmytro Firtash, has several commercial
interests. He is also the 45% owner of RUE - 50% of which is owned by Gazprom
and 5% by Firtash's business partner, Ivan Fursyn.
Gazprom spokesman Sergey Kuprianov sharply contradicted the allegation that the
company was linked to Rosgas: "It is well known that the only export channel
for Russian gas is the company Gazprom Export. The company RosGas which was
named today in the Hungarian media has no relation to Gazprom and is not part
of the Gazprom Group."
According to company records located by Jamestown, RosGas AG was first
registered in Zurich, under the name IKRON AG on December 10, 2008, and changed
its name eight days later to RosGas AG while relocating to Zug - only a few
weeks before the Ukrainian-Russian gas conflict began in January 2009. The two
principle shareholders of RosGas are Andras Laki, and Tamas Grazda, a Hungarian
national who also happens to be the acquisitions and mergers director for
Emfesz and a member of the management board of Emfesz, Poland.
The immediate suspicion is that RosGas AG is yet another in a long line of
shadowy intermediary companies created by Firtash and Gazprom. However, in the
case of RosGas this may mask a possible attempt by Gazprom to cut gas supplies
to Firtash's Emfesz, as a precursor to a company takeover - vastly increasing
its share of the Hungarian domestic gas distribution network.
Hungary has been a key target for the Russian state-owned Gazprom since the
collapse of communism within Central Europe. Viewed as a potential major
European gas hub, Hungary first became a target of the Kremlin in 2002 when a
mysterious gas trading company, Eural Trans Gas (ETG), was registered in
Budapest.
That year ETG took over the contract from a Russian company, Itera, acting as
the intermediary for supplying gas from Turkmenistan to Ukraine. ETG was a
totally opaque structure that was later exposed as belonging to Ukrainian gas
trader Dmytro Firtash and his partner, Ivan Fursyn, a banker from Odessa with
close ties to the administration of then-Ukrainian president Leonid Kuchma.
ETG was paid for its services with 13 billion cubic meters of gas by the
Ukrainian side which it then sold on the European market for a considerable
profit. Soon after it began trading, the company's owners were suspected of
having connections to the Russian mafia. This was denied by the then-unknown
owners of ETG, who instituted a number of libel suits against anyone alleging
the company had mafia links. The Kremlin became nervous and closed down ETG in
July 2004, replacing it with a new intermediary company, RosUkrEnergo (RUE).
The 50% owners of RUE were the same individuals that had established ETG,
Dmytro Firtash and Ivan Fursin, while the remainder of RUE was owned by
Gazprombank - which at the time was a fully owned subsidiary of Gazprom. The
Kremlin, for undisclosed reasons, claimed that it did not know the identity of
Gazprombank's Ukrainian partners in RUE.
According to the company website, one year before the dissolution of ETG,
Firtash created a new Hungarian company: "Emfesz, the First Hungarian Natural
Gas and Energy Trading and Service Provider Ltd., was founded in 2003 to
develop a major gas and energy business in Hungary following the liberalization
of the country's energy market with the passing of the Hungarian Gas Act in
that year."
Firtash presumably had the go-ahead to do this from Gazprom and a guarantee
that he would be able to buy gas for Emfesz from RUE where he controlled 50% of
the company. Firtash's website stated: "The company (Emfesz) has a long-term,
10-year contract with RosUkrEnergo, a Swiss gas distribution company, for the
supply of gas from Central Asia to Hungary."
As the Firtash-Gazprom relationship began souring in 2008, Gazprom made a
number of offers to buy a substantial share of Emfesz. Firtash refused to sell.
In April 2009, the Russian audit chamber announced that Firtash owed Gazprom
$514 million, exerting more pressure on him to turn over his Hungarian
operation to Moscow.
If RosGas begins supplying Emfesz with the large quantities of gas it is
contracted to sell in Hungary, it will raise questions over the source of that
gas. It also raises the question of whether RosGas is another Gazprom scheme to
possibly siphon off funds for the Kremlin and reward Firtash for his
long-standing loyalty to the Kremlin.
Roman
Kupchinsky was born in Vienna, Austria
and emigrated to the United States in 1949. He
graduated in political science from Long
Island University and served in the US Army as a
rifle platoon leader in Vietnam. From 1978-1988
was President of Prolog Research Corp., a
Ukrainian language publishing house and research
company. From 1990-2002 was Director of the
Ukrainian service of Radio Free Europe/Radio
Liberty. From 2002-2008 was a senior analyst at
RFE/RL. He lives in Arlington,
Virginia.
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