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Profit, not politics: Trump allies sought Ukraine gas deal

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The US and the EU have been actively supporting Ukrainian efforts to reform its energy sector, with much attention paid to reducing Ukrainian dependence on Russian gas and to modernizing the Ukrainian gas sector. For Ukraine, energy security reflects not only diversity of suppliers but also diversity and reliability of sources. Energy Bridge would be led by the state-owned utility Energoatom and starts with a connection of Ukraine to the EU electricity system to sell power from unit 2 of the Khmelnitsky nuclear plant.

For now, only a small part of the Ukrainian power system is linked to Hungary through the Burshytn energy island and Energy Bridge aims to integrate this connection. The revenues from selling nuclear electricity into Europe could initially help the finances of Energoatom and the deal might be expanded over time to fund two new nuclear reactors at the Khmelnitsky site originally started by Rosatom, but since abandoned. For Ukraine, the proposed strategic and financial benefits are clear—Energy Bridge enables the provision of nuclear generated electricity from Ukraine to Poland, and possibly deeper into Europe, catalyzing closer linkages between Europe and Ukraine relatively swiftly.

Moreover, the connection uses existing transmission lines rather than new infrastructure. Buttressed up against its own timeline to implement its Energy Security Strategy and the looming expiry date for the Russian-Ukrainian gas transit contract , Kyiv may be tempted to forego geoeconomic and geostrategic considerations when seeking financing or partners to support its overall energy security vision, including Energy Bridge.

This is especially the case in nuclear energy where decades-long relationships are created between builders, owners, and operators. The email messages snuck through the Ukrainian utility servers in droves last summer, asking employees there to "enable content" to read the attached document. When they clicked, the file unloaded the BlackEnergy attack software on their office computer systems, burrowing deep into the information technology side of the business. Once out of sight, BlackEnergy established hidden lines of communication the hackers could use to extract information and download malware, all under the noses of the grid operators.

There was plenty of time to inventory systems and search for passwords and pathways that would take the intruders from business-side computers into the protected heart of the utilities' operations, including the grid operators' control room.

Over many months and perhaps after additional runs of "spear phishing" emails, the hackers were able to find utility officials with credentialed access to the operating systems and steal their passwords, too. With login info, the hackers could escalate from espionage to attack. All they needed was a trigger. On the eve of the assault, utility employees in Ukraine, Russia and a few former Soviet states were slapping each other on the back for a job well done. It was Energy Day, a holiday to recognize and celebrate electricity workers in parts of Eastern Europe.

In a Dec. He singled out their "great, strenuous and highly demanding" work keeping the lights on in Crimea.

It was not an offhand comment. Putin's forces annexed the predominantly Russian-speaking peninsula in , setting off a violent and ongoing territorial conflict that leaked into eastern Ukraine. Crimea, despite its de facto status as a Russian republic, remains connected to Ukraine's electric transmission network. Power outages in the contested territory have been attributed to Ukrainian saboteurs.

Electricity supply

Observers have suggested those blackouts set the stage for Russian vengeance, a theory that would explain the timing and rationale for the Dec. Western Ukrainian grid operators could only watch as hackers booted them from workstations, dragging cursors around control system screens to achieve their own harmful ends. The attackers changed passwords so the Ukrainians couldn't log back in to grab the reins. Utility industry workers were sidelined during those first frantic minutes.

In hacker parlance, they had been owned. No one online could be trusted. The computers, however, were inherently trusting.

What role can Energy Bridge play in Ukraine’s energy resilience?

They dutifully carried out the hackers' commands to open high-voltage circuit breakers at dozens of substations across western Ukraine, knocking out power. The machines had never been programmed to question why so many users would simultaneously log in from unusual internet protocol addresses. The virtual network tied to the operational workstations asked for a username and password — nothing more — to grant unfettered access.

With credentials in hand, the attackers still had to understand Ukraine's Soviet-era electricity infrastructure to do any real damage. After all, they were dealing with three different power distribution management systems at three different companies.

Cost of services:

Once merely spectators, utility workers were now blind to what was happening in the far-flung power distribution networks that had once been under their control. The blackout itself lasted less than six hours in most places. It was hardly calamitous for Ivano-Frankivsk, which is "no Manhattan," as one Ukrainian source put it. The two other, mostly rural areas affected by the outages were similarly accustomed to power disruptions.

Many Ukrainians put up with electricity rationing for the better part of a decade following independence from the Soviet Union in More recently, war in the East has made reliable energy something of a luxury there. While western districts are more secure, critical services — hospitals, key government buildings and the like — still keep backup generators as standard practice. For example, they told people that Trump would replace the U. One of the individuals said he was so concerned by the whole affair that he reported it to a U. Embassy official in Ukraine months ago.

Ukraine, a resource-rich nation that sits on the geographic and symbolic border between Russia and the West, has long been plagued by corruption and government dysfunction, making it a magnet for foreign profiteers. At the center of the Naftogaz plan, according to three individuals familiar with the details, were three such businessmen: two Soviet-born Florida real estate entrepreneurs, Lev Parnas and Igor Fruman, and an oil magnate from Boca Raton, Florida, named Harry Sargeant III.

This helped the relatively unknown entrepreneurs gain access to top levels of the Republican Party — including meetings with Trump at the White House and Mar-a-Lago. The two have also faced lawsuits from disgruntled investors over unpaid debts.

Ukraine crisis: Crimea in the dark in Russia power row

During the same period they were pursuing the Naftogaz deal, the two were coordinating with Giuliani to set up meetings with Ukrainian government officials and push for an investigation of the Bidens. In early March, Fruman, Parnas and Sargeant were touting a plan to replace Naftogaz CEO Andriy Kobolyev with another senior executive at the company, Andrew Favorov, according to two individuals who spoke to the AP as well as a memorandum about the meeting that was later submitted to the U.

Embassy in Kyiv, formerly known as Kiev. Going back to the Obama administration, the U. The three approached Favorov with the idea while the Ukrainian executive was attending an energy industry conference in Texas.

Parnas and Fruman told him they had flown in from Florida on a private jet to recruit him to be their partner in a new venture to export up to tanker shipments a year of U. These conversations were recounted to AP by Dale W. Perry, an American who is a former business partner of Favorov. He told AP in an interview that Favorov described the meeting to him soon after it happened and that Favorov perceived it to be a shakedown.

What role can Energy Bridge play in Ukraine’s energy resilience? - Atlantic Council

Perry, who is no relation to the energy secretary, is the managing partner of Energy Resources of Ukraine, which currently has business agreements to import natural gas and electricity to Ukraine. A second person who spoke on condition of anonymity also confirmed to the AP that Favorov had recounted details of the Houston meeting to him.

Ambassador Marie Yovanovitch and replace her with someone more open to aiding their business interests. Dale Perry told the AP he was so concerned about the efforts to change the management at Naftogaz and to get rid of Yovanovitch that he reported what he had heard to Suriya Jayanti, a State Department foreign service officer stationed at the U. Embassy in Kyiv who focuses on the energy industry. Perry recently provided a copy of the April memo to AP. Jayanti declined to provide comment. Favorov also declined to comment.

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