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One Reason Why The Gas Crisis Might Be Dragged Out

RosUkrEnergo, the secretive intermediary company in Russian-Ukrainian gas deals, has cropped up before. But with the dispute dragging on, the company is under scrutiny once again.

According to Steve LeVine on "The Oil And The Glory":

RosUkrEnergo is the equivalent of a maitre d' who performs no principal role but controls access to the best tables. RosUkrEnergo owns no gas, or pipelines, yet earns a flat 20% take off the top of all the gas sold by Russia to Ukraine.

And in the latest issue of "The Washington Quarterly," Edward Chow and Jonathan Elkind go further:

Non-transparency reaches its peak in international natural gas trade and transit, where the poster child is the shady middleman, RosUkrEnergo (RUE). The company's role is a political bone of contention in that an entity with no assets, no track record, and no transparency was placed at the very center of the Ukrainian gas economy. ...

According to numerous press reports and industry rumors, RUE's ample profits flow into the pockets of well-placed officials in the Russian and Ukrainian gas industries and governmental structures.

The full "Washington Quarterly" report (pdf) is available here.

-- Luke Allnutt

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