Not too long ago, on Nov. 8, 2011, Russian President Dmitriy Medvedev, German Chancellor Angel Merkel, French Prime Minister Francois Fillon, and Dutch Prime Minister Mark Rutte participated in an inauguration ceremony for the first of two natural gas pipelines laid in the sea bottom from western Russia along the Baltic States to Germany. 

You may have heard of this, known as Nord Stream I. This pipeline could deliver 27.5 billion cubic meters of natural gas annually, equal to about 3.5% of the annual consumption of natural gas in the United States in 2016.  A second pipeline of the Nord Stream I system was laid and inaugurated less than a year later on Oct. 8, 2012, doubling the flow to Europe, through Germany.  Some readers may recall during a visit to the Nuclear Security Summit Meeting in Seoul, Korea on March 26, 2012, Presidents Obama and Medvedev met.  This is where the “hot mic” moment occurred.  Obama said, “…this is my last election, after my election I will have more flexibility.” Medvedev said that he would relay the information back to Vladimir Putin.

Russia then moved to annex Crimea from the Ukraine on or about Feb. 23, 2014.  This coincided with the deposing of Russia-friendly Ukrainian President Viktor Yanukovych.  Was it Rahm Emmanuel, Obama’s Chief of Staff, and former Mayor of Chicago who said “…never let a good crisis go to waste…” in 2012? 

Putin wanted to right “the wrong” that Nikita Kruschev managed in 1954 by giving Crimea to the Ukraine.  Annexation was effected on March 26, 2014.  Less than two months later, Hunter Biden accepted a position on the Board of Burisma Holdings, a major energy company in Ukraine.  His business partner at Rosemount Seneca, Devon Archer, who was a roommate of John Kerry’s stepson, Chris Heinz, and a campaign “baby bundler” for Kerry’s unsuccessful bid for the presidency in 2004, was also on Burisma’s board.  Were these U.S. citizens who had ties to high level Obama Administration folks a needed conduit?  Another prominent name, Aleksander Kwasniewski, former president of Poland, also joined the Burisma board around the same time as Biden and Archer.

The founder of Burisma Holdings, Mykola Zlochevsky, was also the Minister of Ecology and Natural Resources of Ukraine from July 2010 until April 2012.  Then he became the deputy secretary for Economic and Social Security on the National Security and Defense Council until Russia interfered with Crimea in February 2014, under President Viktor Yanukovych.  Zlochevsky was like the fox guarding the henhouse since oil and gas leases were awarded through his department.  He fled Ukraine in 2014 and purportedly lives in Monaco.

International oil & gas companies have involved themselves in resource rich Ukraine.  For example, Exxon Mobil in partnership with Royal Dutch Shell had leases to explore for offshore gas in the western Black Sea coast of Skifska.  There was much promise in the region since Exxon Mobil discovered gas in the Black Sea in nearby Romania.  Rex Tillerson was chairman and CEO of Exxon Mobil when Russia annexed Crimea.  Exxon Mobil had significant plays in Russia, both onshore and offshore as well.  Exxon signed eight deals with Russian Oil Company Rosneft’s President Igor Sechin in May 2014, a month after the Obama administration placed sanctions on Sechin.  This exposed Exxon to $1 billion in losses by the end of 2014.  Rex Tillerson was awarded the Russian Order of Friendship medal a year earlier.

If the interpretation of the tea leaves are right, Vladimir Putin wanted to exercise more control of the EU’s energy by pushing more than the already-50% of their appetite for natural gas from western Russia.  Ukraine was in the way.  U.S. oil majors Exxon Mobil and Chevron realized that Ukraine was one of three European countries that allowed fracking for gas and they had substantial reserves.  Chevron signed a $10 billion deal with Ukraine to develop the western Ukraine Olesky deposit holding an estimated 3 trillion cubic meters of gas reserves.  Burisma had conveniently obtained the leases for a major source of shale gas to be fracked in the eastern Ukraine oblast (state) of Donetsk (estimated to contain about 60% to 70% of Ukrainian gas).  Remember the aforementioned relationship between Burisma owner Zlochevsky and former President Yanukovych?  Guess who had been a prior governor of the Donetsk Oblast?  You guessed right if you said Yanukovych.

From whom has Ukraine received upwards of $3 billion a year?  Gazprom has pipelines running through Ukraine and they make these transfer payments to Ukraine for the permission to transmit gas to Western Europe.  So what does all of this add up to?  Russia seizes a Russian friendly area of Ukraine where most people speak Russian, not Ukrainian.  It causes disruption to international oil companies who planned to develop vast resources in eastern Ukraine.  In parallel, Gazprom can turn off the gas flow through the existing land-based pipelines in Ukraine since they are about to commission Nord Stream II gas pipelines paralleling the pair of pipelines laid along the Baltic States’ sea floor to Germany.  Transfer payments to Ukraine stops for onshore pipeline transit.  That still leaves two other sources of gas.  Chevron can frack in the west on their leases.  The east is controlled by the Russian annexation of Crimea.  So the only remaining source is a backflow from LNG imports to Poland.

Poland announced dropping the procurement of LNG from Russia and supplanted it by LNG exported from the US.  However, international agreements would need to be arranged between Poland and the Ukraine to back flow gas to Ukraine until new fracked gas came on line from the Chevron fields.  Could that be why Burisma’s Zlochevsky brought the ex-president of Poland onto his board?  Is it possible that Burisma has been the lynchpin to Putin’s government to further his control of energy to the EU for use as a political tool?

Take a look at the following curve from the USAID website for aid disbursement history to Ukraine:

Yes, that’s right, it peaked at $523 million in 2016.  It probably took a couple of years ahead to get programmed into the budget.  Obama provided blankets and MREs and no lethal aid unlike Trump (Javelin anti-tank missiles).  Was Obama trying to help Vlad (as he had promised to Medvedev in 2012) to back off any potential interference in the energy dealings with Ukraine?  The sanctions with Russia he applied seemed to adversely affect U.S. companies (Tillerson losing a billion dollars) more than Russia.  Remember what Undersecretary of State Victoria Nuland said in a leaked call to U.S. Ambassador to Ukraine Geoffrey Pyatt as reported by ,The Guardian on 6 March 2014?  “…F*ck the EU…”  Enquiring minds would like to know.