Russian police arrested Semyon Mogilevich, a 61-year old mob boss, on tax evasion charges last week.
Mogilevich is allegedly connected to RosUkrEnergo, a trading company half owned by Russian energy company Gazprom and half controlled by two Ukrainian businessmen.
RosUkrEnergo, an entity with a mashed multisyllabic name straight out of the USSR, was created in 2006 to resolve an energy dispute culminating with Russia’s cutting off Ukraine’s natural gas supply.
Ukrainian Prime Minister Yulia Tymoshenko said the arrest is a sign that in the near future ’shadowy intermediaries‘ will be cut out of Ukraine’s dealings with Gazprom.
Tymoshenko is expected to address the issue when she visits Moscow next month. She said involving intermediary companies in the trading process drives up costs.
Tymoshenko has also indicated that she would like to charge Russia more to transport its gas through Ukraine to Europe – a plan Ukrainian President Viktor Yushchenko rejects.
European countries purchase about a quarter of their gas supplies from Gazprom, and about a quarter of that is transported through Ukraine.
RosUkrEnergo is in negotiations with Ukraine’s state energy firm, Naftogaz, over Ukrainian debts of about $600 million to the trader for gas supplies in January and last year.
As explained in an article in today’s New York Times, RosUkrEnergo buys natural gas from Gazprom and sells it to Ukraine at a low price. To make up for the loss, RosUkrEnergo sells some of the gas at higher prices to Europe or blends the gas with lower-cost gas from Central Asia.
Ukraine has agreed to pay $179.50 per 1,000 cubic meters of gas this year. That’s 46 percent more than it paid in 2007, but Western Europe pays on average $350.
For more information about Gazprom, see “Kremlin, Inc.,” the blog of a recent Dartmouth graduate living in Ukraine.
Tags: gas, Gazprom, mobster, RosUkrEnergo, Russia, Semyon Mogilevich, Ukraine, Viktor Yushchenko, Yulia Tymoshenko
