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Odessa refinery shenanigans

November 25, 2014

Following on from yesterday’s entry and the successfully prevented appointment of Petr Hlytsov as Chairman of Odessa Regional Administration – and the anti-reform, ex-Regionaire, Klyuyev puppet constituency of the elite within Odessa that backed him – some commentators are rather speculatively see that his opponent, Mikhail Shmushkovitch, falling tantalizingly close to, but not reaching the 67 votes required to take permanent office, is really a battle between President Poroshenko and Ihor Kolomoyskyi for control of Odessa – when combined with the fact that Igor Palitsia, the current Govenor, is a Kolomoyskyi man who will also be required to resign to take his seat in the next RADA.

Time for a disclosure.

On Friday afternoon this blog was in the office of Alexie Goncharenko at the Regional Administration, shortly after his resignation as Chair.  Discussions about the next Chairman and Governor occurred – although that was not the purpose of being there.

To be blunt, the voting results would have been much closer if Mr Goncharneko had not spent the previous week lobbying the council members hard on behalf of fellow Block Poroshenko  party member Mr Shmushkovitch to become his replacement.

To be equally clear, Mr Goncharenko considers repelling the forces of Mr Hlytsov, albeit temporarily, a victory.

Two weeks ago, whilst Mr Goncharneko was in Strasbourg, Mr Hlytsov began gathering the corrupt and corruptible hordes, those about to be subjected to lustration within the council, and the external local Odessa “players of influence” to his flag.  A case of whilst the cat was away, etc.

Hence, demolishing a good deal of what was nefariously constructed in his absence, Mr Goncharenko deems a victory – and perhaps it is.

By the time the next vote takes place in mid-December, things may look different.  In the meantime, Mr Shmushkovitch assumes the position of “Acting Chair” in place of Mr Goncharenko.

What have all these Regional Council shenanigans got to do with Igor Kolomoyskyi? – Very little.  Whether Mr Shmushkovitch sits in the “Chairman” chair in an acting or substantive role, neither diminishes nor increases the power he holds.  Mr Kolomoyskyi has no candidate in the fight for Chairman of the Odessa Regional Council.  With Mr Hlytsov being a bought and paid for Andrei Klyuyev man, he seems hardly likely to be the preferred choice of Mr Kolomoyskyi.  Therefore, any muted supported for Mr Shmushkovitch from the Kolomoyskyi people (if indeed it was muted) within the Regional Council relate to concessions to be hopefully gained rather than toppling a Poroshenko candidate for the sake of it.

So, if Odessa Regional Council is so unimportant to Mr Kolomoyskyi that he has no runner in the race for Chair, what concessions could he be seeking in Odessa for any “currently restrained” support?  His active  business interests in Odessa at not particularly extensive.  They have not noticeably increased since his friend became Governor either.

Well, one of Mr Kolomoyski’s main interests in Odessa, is in an entity in which he has no interest – financially speaking.  That is the Odessa refinery.

Odessa refinery was sold to now fugitive Sergei Kurchenko, a man thoroughly emeshed within “The Family” Yanukovych regime, and who has currently taken refuge in Moscow for the foreseeable future.

Aside from a governmental need to prevent the refinery working, thus preventing a possibly fraudulently acquired asset generating illicit revenue for “The Family” whilst in Russia – there is also a Mr Kolomoyskyi interest.

Ihor Kolomoyskyi’s Privat Bank has a 42% share in an oil refinery called Ukranafta.  That refinery has not been working at full capacity – thus neither have its profits been all they could be.  Ergo it is in the interests of Mr Kolomoyskyi to see the Odessa refinery officially closed under the auspices of money laundering prevention/further facilitation of fraud that would benefit the previous regime – even if that is not his real driver.

Today, that closure is going to happen.  The Prosecutors Office in Odessa will arrest Odessa Refinery to prevent illicit oil sales.  Mr Kolomoyski’s comment?  “It’s not our asset, and we are not interested in it, we have underused Kremenchug plant, and the Odessa refinery should be closed so as not to spoil the ecology of Odessa.  Odessa should shine after the loss of the Crimea.”

There is no political need to own either Governor or Regional Council to achieve the closure of Odessa Refinery, and in doing so improving the output of Mr Kholomoyski’s Kremenchug refinery.  Owning or renting a prosecutor or a judge is all that is necessary for the asset to be arrested.

Once arrested, there can be no doubt that the refinery will remain closed for some time.  Ukraine is busy trying to privatise assets to get them off of the government books – not put them back on.  Mr Kurchenko will have great difficulty in releasing this asset – and until it is released, nobody can do anything with it.  Presumably all oil at Odessa Refinery will now be stored at the State owned Ukrtransnefteprodukt.

One of Mr Kolomoyskyi major interests in Odessa (in which he has no interest) has been achieved – no Governor or Regional Council (Chairman or otherwise) required.

As for who will become the next Governor of Odessa – a position in which Mr Kolomoyskyi current does have the top dog?  That discussion took place on Friday afternoon too, although all opined on that subject – for now – will remain unwritten.

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