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Crimea Nationalizes Ukrainian Oil and Gas

The Crimean parliament voted on March 17 to nationalize the assets of Chornomorneftegaz, a day after holding a referendum on secession from Ukraine. Chornomorneftegaz is a Ukrainian state-owned oil and gas company. Last week, Crimean officials made statements alluding to the fact that Crimea would seize oil and gas assets on its territory. Deputy Prime Minister Rustam Temirgaliev said that once Crimea took control of Chornomorneftegaz, it would then “privatize” it by selling it to Gazprom – effectively handing it over to Russian control.

The vote to take oil and gas assets belonging to Kiev came one day after Crimea voted overwhelmingly to leave Ukraine and join Russia. What was known as the Council of the Autonomous Republic of Crimea before Sunday’s vote has since been renamed the State Council of the Republic of Crimea. Crimean officials hope to swiftly join the Russian Federation.

A day before the referendum, Russia sent troops to seize a natural gas facility within the boundaries of Ukraine – beyond the borders of Crimea. This provocative move exacerbated an already tense standoff between Russia and the West. Russian President Vladimir Putin spoke with President Barack Obama by phone on Sunday, but no diplomatic progress was made. The West has promised greater sanctions on Russia if it followed through with the referendum. The seizure of a natural gas plant in Ukraine, which was unexpected, will give greater momentum for action from the West. Over the last few weeks the European Union has been divided on how forcefully to respond to Russia. Some countries, including Germany, have very strong commercial ties with Russia and feared sanctions would disrupt their economies. It appears that this past weekend’s events have unified EU members around a stronger response. European policymakers are meeting in Brussels on March 17 to consider sanctions against Russia.

By. James Burgess of Oilprice.com

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