Time September 21/September 28, 2020World
AS TRUMP’S
RE-ELECTION
CHANCES WANED,
PERRY’S ALLIES GOT
THE COLD SHOULDER
advancing, and pushed forward. In early March, representa-
tives of LNGE met with Perry’s successor as Energy Secretary,
Dan Brouillette, a veteran of Louisiana politics. “He told us
they were still 100% behind the deal,” says one of the LNGE
representatives who was at that meeting. The Energy Depart-
ment denies it supported the deal. The meeting with LNGE
“was purely introductory and informational,” says Shaylyn
Hynes, a spokesperson for the department.
After that meeting, things in Ukraine began to move fast.
On March 11, the Zelensky government issued a decree ap-
pointing Bensh to the board of Naftogaz. Two days later,
Ukraine’s deputy energy minister announced that Ukraine
had agreed to a major LNG deal with the Americans. The U.S.
partner on the deal: Louisiana Natural Gas Exports.
The details were not disclosed, but the way the deal came
about raised eyebrows on both sides of the Atlantic. In the U.S.,
critics pointed out that the Energy Department’s apparent sup-
port for the deal appears to have violated federal rules that bar
U.S. officials from advocating for U.S. companies that have not
been vetted by the Commerce Department. LNGE never went
through that vetting process, according to its executives. “The
vetting process is there to identify conflicts of interest, previ-
ous improper dealings, anything that might reflect poorly on
the U.S. government as a whole,” says Theo LeCompte, who
was a deputy chief of staff at the Commerce Department dur-
ing Barack Obama’s second term. Brouillette’s office confirmed
that LNGE had not been vetted and denied that the depart-
ment had advocated for the company.
On the Ukrainian side, things were even more curious:
Ukraine had not invited any competition for the deal. But
even with the U.S. Energy Department’s apparent bless-
ing, the deal still wasn’t a lock. Naftogaz executives were
still refusing to partner with the Louisiana company. As
an alternative partner on the Ukrainian side, Kyiv’s en-
ergy ministry proposed an obscure state entity called MGU,
which holds the shares of Ukraine’s gas-pipeline system.
But executives at that company also
began to raise alarms, most notably the
chairman of its supervisory board, Walter
Boltz, a stately Austrian who had been
brought in to help clean up the notori-
ously troubled Ukrainian gas industry.
“Nobody wanted to tell the Americans,
‘O.K., this is a silly idea, stop it,’ ” says
Boltz of the Louisiana deal. “You need
to keep your friends happy.” And the Ukrainians, he added,
“might even be willing to pay a little bit more, I guess, to make
Trump happy and keep the military aid flowing.”
By the end of May, the energy ministry had fired the skeptic
Boltz and announced another preliminary agreement with the
Louisiana company. In a 20-page document, known as a mem-
orandum of intent, the two sides spelled out the rough terms
of the deal. Ukraine would agree to take shipments of gas from
Louisiana for the next 20 years, according to a copy obtained
by our reporting team. The volumes involved were substantial ,
amounting to 5.5 billion cubic meters per year, more than the an-
nual gas consumption of Slovakia, an E.U. member that borders
Ukraine. Executives at the Louisiana company say they pro-
jected the total sales from the deal to be around $20 billion, or
roughly a billion dollars per year over two decades.
Still, the agreement left one crucial question unanswered:
Where was the Louisiana company going to get all that gas? In
June, LNGE turned to Energy Transfer. By that point, Perry
had reclaimed his seat on the board of Energy Transfer and
acquired its stock. Once the Louisiana ex-
ecutives had their preliminary deal with
Ukraine, they went to Energy Transfer in
search of a gas terminal, says Miller, the
co-founder of LNGE. In a statement, En-
ergy Transfer played down these discus-
sions, saying they amounted to “one in-
troductory conference call” that did not
go any further, and Miller insists they did
not talk about a partnership in Ukraine at the time. Other ex-
ecutives at LNGE say it was just one step toward complet-
ing the $20 billion deal. “First we had to finalize the deal in
Ukraine,” one of them says. “Then we get the gas.”
It was at this final stage in the negotiations that the deal ran
into major trouble. The Ukrainians began to stall. According to
one official involved in Ukraine’s deliberations about the deal,
the reason for the delay was in large part political. By then, the
COVID-19 pandemic was raging, and Trump’s approval rat-
ings had gone into sharp decline amid his chaotic handling of
the outbreak. His chances of winning re-election began to look
less and less likely.