Statement of a criminal offense in the field of energy supply of Ukraine to Security Service of Ukraine

6. PEOPLE'S DEPUTY OF UKRAINE
No. _______
dated December ___, 2019
Security Service of Ukraine
Statement of a Criminal Offence
in the field of energy supply of Ukraine
(pursuant to Art. 214 of the Criminal Procedure Code of Ukraine)
In this statement of a criminal offence I would like to draw attention to the act of
treason by the leadership of the state, top management of Naftogaz of Ukraine NJSC
and other officials of the country, i.e. the actions committed intentionally to the
detriment of the economic security of Ukraine.
According to official data, since 2014 Naftogaz of Ukraine NJSC does not buy
Russian gas, there is even a website that records the number of days gone by during
this period. Instead of the Russian gas, as the company confirms, Ukraine purchases
European gas, for example from Slovakia.
This decision was made following the initiative of Arseniy Yatsenyuk, the Prime
Minister of Ukraine, and was implemented in 2015 by a decision of the Verkhovna
Rada of Ukraine in the Law On the Natural Gas Market.
Article 3 of this Law stipulates the principles of the natural gas market functioning:
1) ensure a high level of protection of the rights and interests of natural gas
consumers, including the provision of primary interest in the security of natural gas
supply, in particular by diversifying sources of natural gas supply;
2) free trade of natural gas and equality of natural gas market subjects, regardless of
the country under whose laws they were established;
3) free choice of the natural gas supplier;
4) equality of rights to import and export natural gas to/from the territory of Ukraine;

7. 5) non-interference by the state in the functioning of the natural gas market, except
when it is necessary to eliminate market failures or to ensure other public interests,
provided that such interference is carried out in a minimum sufficient manner;
6) ensuring equal rights of access to gas transportation and gas distribution systems,
gas storage facilities, LNG units;
7) prevention and elimination of restrictions of competition caused by the actions of
natural gas market subjects, including natural monopoly subjects and state-owned
entities;
8) compliance with the established technical and safety standards;
9) protection of the environment and efficient use of energy resources;
10) liability of natural gas market subjects for violation of the rules of conduct on the
natural gas market and the terms of contracts.
After that, official figures of gas supplies from Russia dropped sharply, and gas
supply from Europe rose accordingly.
Gas import from Europe, billion cubic meters
Naftogaz Other importing companies
2014 4.9 0.14
2015 9.2 1.1
2016 8.2 2.9
2017 8.7 5.7
2018 7.0 3.6
* Official data of Naftogaz of Ukraine
At the same time, for 3.5 years (2015-2018) the average price in Europe for 1,000
cubic meters of the same gas that Ukrainians buy is USD 211, but Naftogaz bought
the gas at an average price of USD 245.63. The difference is almost USD 35.
In July 2018 – April 2019 the average price in Europe was USD 238.46, and Ukraine
imported the gas at a price of USD 288.55. The difference is USD 50 per every
thousand cubic meters.
Average gas price

8. Europe Ukraine
January 01, 2015 – June 30, 2018 USD 211 USD 245.63
July 01, 2018 – April 30, 2019 USD 238.46 USD 288.55
At the same time, instead of increasing gas production on the territory of
Ukraine or purchasing the gas from Europe, the government and the top
managementof NaftogazofUkraine built a corruption scheme which resulted in
a situation where Ukraine loses about USD 50 on every thousand cubic meters.
Over five years Ukraine overpaid almost USD 1.5 billion for the so-called
European gas!!! At the same time, most of these funds remained in the pockets
of representatives of Ukrainian companies and Naftogaz officials.
The essence of this corruption scheme is as follows.
The largest European gas importer is ERU (Energy Resources of Ukraine). More
precisely, it is a group of companies, whose name contains "ERU" – registered both
in Ukraine and offshore.
ERU Group of Companies:
 ERU CORPORATION BRANCH
 ERU CORPORATION
 ERU MANAGEMENT SERVICES LLC BRANCH
 ERU MANAGEMENT SERVICES LLC
 ERU TRADING LLC
 WORLAND TRADING PE (ERU TRADING PE until December 23, 2018)
Andriy Favorov, whose company's revenue has increased substantially in recent
years, is indicated as the final beneficiary of the last company.
2015 – up to UAH 3 billion
2016 – up to UAH 4.7 billion
2017 – up to UAH 5.5 billion
2018 – up to UAH 2.4 billion

9. Part of these funds was withdrawn to offshore. For example, from July 21, 2016, to
June 23, 2017, the company has transferred to the account of ERU MANAGEMENT
SERVICES LLC almost UAH 348 million under fictitious contracts; from May 25,
2017, to July 25, 2017 – UAH 274 million and this is most likely only part of the
amount that has been discovered.
In total, more than UAH 620 million was withdrawn from the country.
Summing up, I would like to point out that instead of increasing the gas
production in the interests of the state, the above officials created a corruption
scheme for their own enrichment resulting in significantdamage to the economic
interests of the state, thereby committing the criminal offence under Art. 111 of
the Criminal Code of Ukraine (treason).
According to Part 1 of Article 214 of the Criminal Procedure Code of Ukraine, the
investigator and prosecutor are obliged to register immediately, but not later than 24
hours after filing a statement or notice of a criminal offence or after independently
identifying circumstances from any source that may indicate a criminal offence, the
relevant information with the Unified Register of Pre-trial Investigations and initiate
investigations.
Given the above, guided by Art. 214, 216 of the Criminal Procedure Code of
Ukraine,
I HEREBY REQUEST:
1. No later than 24 hours afterfiling this statement of a criminal offence, register
the relevantinformation with the Unified RegisterofPre-trialInvestigations and
initiate a pre-trial investigation in order to establish the actual circumstances of
the case and prosecute the perpetrators.
2. Notify me of the results of consideration of the statement of criminal offence
within the statutory time limits.
3. Take measures to stop the corruption scheme related to gas import to
Ukraine.
People's Deputy of Ukraine A. Derkach