Ukraine Crushed in $1.1bn Fake Gas Deal

Certainly the folks at Gazprom are having a good snicker, reveling in the mockery that has been made of what should have been a landmark Ukraine-Spain gas deal that would have loosened Russia’s gas grip on Kiev.

Everyone wondered how Russia would respond to Ukraine’s attempt at gas independence. But this is what happens when you mess with Gazprom.

It was a horrible moment for Ukraine on Monday—all the more horrible because the whole event was televised—when the historical $1.1 billion deal it was about to sign with Spain’s Gas Natural Fenosa turned out to be fake.

Why was the deal historical? It would have secured $1.1 billion in investment for the construction of Ukraine’s first liquid natural gas (LNG) terminal on the Black Sea and a pipeline connecting the country’s vast gas network to the terminal.  

More to the point, this would enable Ukraine to import by tanker up to 10 billion cubic meters of European gas at a price 20% cheaper than Gazprom. Even more to the point, it would be a major first step toward reducing Ukraine’s dependence on Russia.

The deal was that investors had apparently signed agreements through a newly formed consortium for the construction of the $1.1 billion LNG terminal.

Here’s how the ill-fated signing ceremony went down: