In the months leading up to President Donald Trump’s July 25 phone call with Ukrainian President Volodymyr Zelensky, multiple people associated with Trump, both inside and outside of his administration, were engaged in efforts to change leadership at Naftogaz, Ukraine’s geopolitically important state-owned oil and gas company.
One of those people, US Energy Secretary Rick Perry, faces a deadline Friday to comply with a congressional subpoena as part of the ongoing impeachment inquiry.
Questions about whether Trump offered to restore military aid in exchange for politically beneficial investigations in Ukraine have formed the basis of the impeachment inquiry. But the parallel attempts to influence Naftogaz further illustrate the nature of the Trump administration’s interactions with Ukraine, in which statecraft and diplomacy appear to be mixed up with political and business interests and which are now the focus of a federal criminal investigation.
The common thread in these attempted shakeups of Naftogaz is Rudy Giuliani, Trump’s personal attorney who has emerged as a central player in US-Ukraine relations.
Among those pushing for changes at Naftogaz was Perry. During his May trip to Kiev for Zelensky’s inauguration, Perry delivered a list of four candidates to replace the existing American member of Naftogaz’s international supervisory board, according to a source familiar with Perry’s conversations.
Two months earlier, Naftogaz was also in the crosshairs of two associates of Giuliani, Lev Parnas and Igor Fruman. Parnas and Fruman were pushing a scheme at a major energy conference in Houston to replace Naftogaz’s chief executive officer with someone who would be more beneficial to their own business interests, according to one American businessman informed of their efforts.
The two Florida-based businessmen, who have given more than $300,000 to pro-Trump and Republican political committees, were indicted for campaign-finance violations last week. Some of those potential violations concern donations made through a company controlled by Parnas and Fruman called Global Energy Partners.
Parnas and Fruman aided Giuliani’s efforts to dig up dirt on Trump’s political opponents in Ukraine. Secretary Perry, meanwhile, has said he has discussed Ukrainian corruption with Giuliani. “I had a conversation with, a phone call with Rudy Guiliani about it,” Perry said in an interview with the Christian Broadcasting Network earlier this month.
CNN has also reported that in late May Trump directed Perry to speak with Giuliani – a private citizen – about whether Zelensky was someone Trump could trust and engage with.
Giuliani denied he talked to Perry or anyone else about Naftogaz. “I don’t know a damn thing about Naftogaz except that it exists,” he told CNN.
Perry, Parnas, Fruman and Giuliani have all been subpoenaed by House Democrats for information relating to the impeachment inquiry. The deadline for Perry to comply is Friday.
Furthermore, potential changes at the Ukrainian energy giant could have major geopolitical implications. Gazprom, Russia’s own state-owned energy corporation, has a contract with Naftogaz to move product through its pipelines in Ukraine.
“Naftogaz’s pipeline system transfers half of Russian oil to Europe,” said Ed Chow, an energy expert at the Center for Strategic and International Studies, a bipartisan think tank in Washington. “It’s a strategically important company to the Ukrainian economy but also for the Ukrainian state.”
That contract with Russia’s Gazprom concludes at the end of the year and is currently up for renegotiation. The construction of the Nord Stream 2 pipeline, a controversial expansion of the existing pipeline between Russia and Germany, also threatens to cut Ukraine out of a big chunk of the European natural gas market.
“It’s always hard to decipher Russia’s intentions,” said Richard Morningstar, the chairman of the Global Energy Center at the Atlantic Council. “But an unsettled Ukrainian energy situation makes it easier for them to convince the Europeans they can’t trust Ukraine to move natural gas. “
In May, according to a former US official involved in Ukraine, Perry provided names to Ukrainian officials as potential replacements for the American member of the Naftogaz supervisory board.
The board was developed in coordination with the United States and other Western countries during the Obama administration to provide oversight and guard against corruption, a concern in the region, the former official explained. Three members are appointed by the Ukrainian government and four are recommended by the United States and the European Union through consultation with organizations like the International Monetary Fund and the European Bank for Reconstruction and Development. The Ukrainian government must approve the international members, who currently are American, British, French and Canadian, according to the company’s website.
Perry’s goal, the former official believed, was to replace the current American representative, Amos Hochstein, with someone more known and favorable in Republican circles.
The official said Perry perceived Hochstein, a former diplomat, as an “Obama/Biden” guy in Ukraine. Hochstein is an executive for a Houston-based natural gas company and remains on the Naftogaz board. Hochstein did not provide comment for this story.