Ukrainian security service raids gas firm HQ

By Pavel Polityuk

KIEV (Reuters) - Armed officers of Ukraine's security service raided the headquarters of state energy firm Naftogaz on Wednesday in what appeared to be a new twist in a power struggle between the president and prime minister.

The SBU security service, overseen by President Viktor Yushchenko, said the operation was part of a criminal investigation into the company at the centre of a gas price dispute between Russia and Ukraine at the start of the year.

"This is an investigative group, not people in masks," SBU spokeswoman Maryna Ostapenko said by telephone. "And let no one at Naftogaz tell lies by saying they weren't told about it...This is all within the framework of the law."

Ukraine is the main transit route for Russian gas exports to Europe, and the January row disrupted supplies to many countries until Prime Minister Yulia Tymoshenko clinched a deal to end it.

Yushchenko and Tymoshenko were allies in the pro-Western "Orange Revolution" in 2004 but are now constantly at odds. The president has criticised the prime minister for agreeing to a sharp rise in the price Ukraine pays for Russian gas.

Russia's gas export monopoly Gazprom said the raid could threaten Ukraine's latest payment for Russian gas, due by the weekend.

But Naftogaz said the action should have no effect on its operations, though officials acknowledged that the investigation froze all transactions involving gas in the ex-Soviet state.

"We will do everything to pay on time," Naftogaz spokesman Valentyn Zemlyansky said by telephone. Ukraine's transit gas monopoly Ukrtransgaz said gas flows were continuing to European customers uninterrupted.


Tymoshenko was holding talks in Paris on Wednesday.

Her first deputy prime minister, Oleksander Turchynov, said the raid and associated legal action could destabilise the ex-Soviet state, already gripped by nearly constant political disputes since the 2004 upheavals.

The aim, he said, was to disrupt Ukraine's efforts to pay its gas bills on time.

With Ukraine's key industries battered by the financial crisis, the two leaders briefly abandoned their antagonism this week to make a joint submission to the International Monetary Fund to keep intact a $16.4 billion loan programme.

The president has criticised the contract clinched by Tymoshenko in January as a "defeat" for Ukraine, but has made no suggestion it could be reviewed or overturned.

A Reuters witness said the men entering Naftogaz offices were wearing black uniforms and helmets with visors.

"At the moment, it is clear that the building is sealed off. There are other units standing in the courtyard," spokesman Zemlyansky told reporters.

"It is only from news reports that we know that the SBU is conducting some sort of investigation. But how can you call this an investigation when they are carrying weapons?"

A senior Naftogaz official told reporters the security services were searching for original copies of the new gas contract with Russia -- vital to ensure payment for supplies.

"If we don't have these contracts, then Naftogaz cannot bring the gas through customs or (secure) the transit of gas, Serhiy Davydenko, head of Naftogaz's legal department, told reporters.

"It cannot carry out its obligations under these contracts."

The customs service earlier said it had legally taken over 11 billion cubic metres of gas owned by RosUkrEnergo -- a gas intermediary between Russia and Ukraine denounced by Tymoshenko as corrupt.

The contract with Gazprom eliminated RosUkrEnergo as a supply middleman between the two countries.

(Additional reporting by Yuri Kulikov; writing by Ron Popeski, editing by Mark Trevelyan)