Crimean natural gas deposits may be claimed by Gazprom

All Ukrainian state assets located in Crimea will be nationalized, Crimean Parliamentary Speaker Vladimir Konstantinov told journalists on March 13, as reported by the RIA Novosti agency. They include Chornomornaftogaz, the Crimean branch of Ukraine’s state natural gas production monopoly, Naftogaz of Ukraine (NAFTO). “It should be Russia that will produce oil and gas in Crimea, Gazprom,” he said. A delegation of Gazprom executives already visited Crimea earlier this week, according to sources cited by Ukraine’s Espresso television network and Internet streamer. Private companies that are working in Crimea will not be nationalized, Crimean Vice Prime Minister Rustam Temirgaliev said on March 12.

Alexander Paraschiy: The decrees and intentions of the Crimean government cannot be taken seriously for as long as Crimea is a part of Ukraine, though its de facto annexation after this weekend’s referendum looks all but certain.

Ukraine’s biggest loss from the annexation will be Chornomornaftogaz and the potentially large offshore natural gas deposits in the Black Sea shelf. The Russian-backed Crimean government is essentially giving the Naftogaz subsidiary to Gazprom (GAZP RX), which will receive an extremely valuable asset and thereby earn a one-way ticket to sanctions from the West.

The possible loss of Ukraine’s control of its offshore gas assets can also affect DTEK (DTEKUA), whose subsidiary Vanco Ukraine has interests in the Prykerchenska Hydrocarbon-Bearing Area, based on a signed production sharing agreement with the Ukrainian government. We can’t rule out the deal’s cancellation or revision of its parameters.