The market of fuel in the so-called “LPR” after the capturing of power in the part of the region by separatists, looks like a poor excuse of things, that existed there before a war.  The infrastructure of Fuel and Energy Complex has undergone considerable damage during the warfare. As a result of fightings and followed anarchy a number of objects of Fuel and Energy Complex was ravaged and destroyed.

A part of gas stations was seized by insurgents, as was his custom, and now they’re going to open “state network of  refills” on their base. Continuous series of “fuel crises” regularly covers both “republics” and, in particular, “LPR”. It shows that it still hasn’t become possible to rearrange fuel supply from the territory of RF. There is a number of possible reasons for it.

From one side, it’s a mistrust of a business to the leadership of the terrorist regimes.

From another it is the ambition of Russian “curators” of “republics” to get maximum profit from the occupation to cover partly costs, connected with the content of occupied territories.

From the third it is the wish of “new appeared elite” of terrorist enclave of “LPR” to take under control all spheres of a business and economic activity, which still can bring some profit – from the realization of food and medicine to fuel market and coal trading.

Today and tomorrow

Three huge oil depots and nearly 30 gas stations worked in the “capital” before a war. Insurgents has captured hugest of oil depots, located on Rudneva street, 60, as the strategy object already at the beginning of war conflict. The power of the regional oil depot, comparing with other two is impressive. It is a few tens of thousand. cu. m.

In time of warfare a few fuel tanks were damaged on the territory of this enterprise and self-proclaimed authorities continued to use those tanks, which hadn’t been disabled yet. According to the tradition of the “Founding Fathers” of the young “republic”, the oil depot was named ‘republic’ as more things in Luhansk, that had named “regional” in the old days.

Also, insurgents captured the oil depot in Rovenki, which is used now as the “transshipment point” for fuel distribution.

The second “capital” oil depot on Krymskaya street has much more modest power, near a few thousand. cu. m. According to the data of the source in the “young republic”, now this oil depot is continuing to work, but not at full capacity.

The third oil depot was less than these two, it capacity was only 500 cu. m. and it was located on Dachnaya street, not far from exit on Krasny Yar. This enterprise was no luck most of all, because it was located in the immediate vicinity to the 7th block-post of the insurgents of “LPR”.

Unenviable neighborhood has brought to the situation when mines and shells had been flying under the heads of the staff of oil depot in the side of checkpoint in summer 2014.  As a result, the leadership of the enterprise decided to close “on the lock” oil depot till the end of the war. “Afterwards we’ve made sure, that decision of the chiefs was right, mines and shells fell down on the territory of oil base. There was direct hit into the lodge. were other demolitions”, tells our source.

At the end of war fare the leadership decided to renew work. But, coming back to a place, the staff saw that practically nothing left after their enterprise. The fighters remove from the territory all equipment, took away bowser and other devices. Fuel tanks were cut out. The scathe to enterprise took not less than 200 thousand of the United States dollars.

The apply to the “minister” at that times Lyamin hasn’t brought the results. So-called “policemen” of “LPR”, who were called at a place scared of present fighters and predictably didn’t solve this problem. To find the truth failed in powerless terrorist enclave. Unofficially was found out that inhabitants, who “served” near 7th block-post, so-called cossack battalion “DON”, had a direct bearing to the robbery of the oil depot.

The owners of the enterprise don’t give any official comments for today, because, according to our data, they still have commercial interests on the occupied territories. We give such an example for reader to have next representation in what conditions the entrepreneurs are forced to work on the occupied territories.

Short prehistory

The problems with fuel and lubricants began from the moment of the beginning of the occupation of Donbass by the insurgents. As informator.lg.ua has written earlier, after the end of active phase of the warfare, the fuel market of “republic” began to be domesticated by Russian companies of the Ukrainian olgarch Sergei Kurchenko, run away to Moscow. MP from “Udar” Egor Firsov reminded about it in his twitter in spring 2015.

Disgraced businessman indirectly confirmed this information in his interview to Russian internet edition RBC and confirmed that he’s trying to keep his influence on the territory of Ukraine. Considering legal nihilism and factual anarchy, prevailing in ‘republics’, it could be supposed that mister Kurchenko built his business on these territories on the same manner as he worked earlier on the hall territory of Ukraine. The situation with the commerce supply of mineral oil on the occupied territories has deteriorated markedly in autumn 2015.

The resonance event, connected with the energetic – so-called “top brassers” of young republic, has detained the “minister” of the fuel and energy of “LPR” Dmitriy Lyamin, happened in “LPR” on October 17.

As we write earlier, the arrest of Lyamin was connected with the collision of business-interests of Kurchenko and terrorist top of “people’s republic”. Ukrainian journalist in the past and now Russian separatist propagandist Aleksei Chalenko immediately reacted on the detention of the “minister”. He blamed Kurchenko in the attempt to corrupt the “ministers” of “LPR”.

Anyway. the problems with fuel supply matched with serious “cooling” in the relationships between Kurchenko and young “republics”. First “DPR” and then “LPR” have claimed about the introduction of “sanctions” against businessman, who ostensibly thwart the plans of supply of petroleum products in the “republic”. According to the opinion of our source, closer to the authority of “LPR”, the reason of spat is the banal greed of the leaders of “LPR”. New elite of the terrorist enclave simply haven’t agreed with the businessman about share in the fuel business.

Fuel collapse

Since October-November 2015 Sergei Kurchenko has stopped to provide “LPR” fuel. The situation with petrol selling became permanently worst in the dynamic young state. The fuel for war needs and also on other “needs of the state” was supplied to “republic”, but with interruptions. The commercial gasoline wasn’t enough. At the end of the first ten-day period of November the petrols absolutely disappeared on Luhansk gas stations. The background of it became the speculation in “LPR” and except promised by the “authority of republic” 40 roubles per litre of fuel, people were forced to buy gasoline for 55 roubles and more, sometimes for 80 roubles per litre at the speculators. It’s obviously that the most prepared and knowledgeable could earned on this.

Some time the authority of “LPR” prefered to ignore the problem of the fuel deficit. Later the leader of “republic” began to carefully speak about soon overcoming of the fuel crisis. People of “LPR” were feeded with promises all October and November. The gasoline appeared occasionally in the “young capital” and huge queues appeared at the moment when it was delivered to one of the gas stations.

The attempt of “Deshadowing”

After the detention of the “minister” Lyamin the conflict inside the authority of “republic” (between Plotnitsky group and top-brassers) was frozen and all “statesmen” began to “struggle with the corruption”. The data of the so-called “State Committee of Statistics of LPR” indirectly shows that fuel market in the “republic” is tried to be withdrawn from the shadows.

If the statistics data, published by this organization for the September 2015 is true, 419 tons of petrol was sold in the “republic” in October, when jams with fuel have already felt. Gas stations ostensibly sold 496 tons of petrol and 612 tons of fuel were sold in November, when all young state was very thirsty about fuel. Ukrainian journalists wrote that the number of fuel sold on September was underestimated, as minimum on a half.

It’s no so hard to explain to explain the discrepancy of the numbers of “Statistic Dept.” to life reality: most likely, statistical reports, given by the respondents to the “Dept.” in times of “minister” Lyamin was artificially lowed to economy funds.

The question is in fact, that the leadership of “LPR” introduced a temporary excise tax on the import of fuel to the territory of “republic” at the end of the spring 2015 – $150 from 1 ton for import and $100 in a case of the transit through the “republic” territory. Let’s add here traditional requisitions, which are collected from the entrepreneurs of young republic by “tax authorities” and we’ll find out that amount of savings could be huge enough.

In time of Lyamin ruling a biggest part of “fuel market” was in the shade on the occupied territories – entrepreneurs saved money and divided “savings” with the minister, who now is suspected in corruption by separatists.  

“It was written a lot, that contraband in “republic” bloomed in time of Lyamin ruling. During the summer-autumn 2015 the “pool” of local businessmen, working in the fuel and energy sphere – owners of not so big gasoline stations and fuel trucks, formed around the “minister”. Soon, pool of people, having enough opportunities and contacts to earn money in turbid flows of market conjuncture of fuel market of “LPR, formed among the “top” of young republic. So, according to data of our source, the owner of a few fuel trucks Dmitriy Papilin earned serious amounts during all 2015. Also, “steward” of Dmitriy Papilin, the owner of a few Luhansk gas stations Sergei Kolesnik had snug income from the fuel-trade.

For today “State Committee of Statistics of LPR” shows numbers that more close to the reality. The same opinion has our source, who’s working on one of the gasoline stations of Luhansk. He’s sure that twice as much of gasoline was sold on September in “republic” comparing with October.

The struggle with contraband of fuel, begun after the arrest of “minister” Lyamin acquired “state” scales in “LPR”. It became impossible to import the petrol from Russia. The residents of border settlements of “LPR”, like Sverdlovsk, had no opportunity to bring from Russia a couple of jerrycans with gasoline in trunk – the insurgents begin to vigilant about “protection” of their fuel market.

Desperate search for the new partners

If chieftains of the separatists were supposing that after mister Kurchenko leaving from the fuel market of “republics”, the big queue from Russian supply companies, wishing to take his place, will line up, they were strongly wrong. Wishing to provide “republics” with fuel turned not so a lot in Russia and it failed at the beginning of January to establish regular commercial deliveries of petrol from Russia. We would remind that “republics” can’t have official cooperation with RF, because Russia doesn’t recognize them. Nevertheless, some Russian state structures have already noted in the intervention into economic life of the occupied territories as Crimea and a part of Donbass. One of such enterprises is the Russian “Promsyrieimport”, which leads its story from the Soviet times. According to data of Russian business-directories, this union of the specialized enterprises engaged in the export and import of steel products and ferro-alloys.

The capturing of Crimea by Russia and occupation of the part of Donetsk and Luhansk Regions practically matched in time with the serious changes in the history of this seemingly ordinary association. Russian internet edition Moscow Post has published on December 2014 the material, dedicated to plans of Russian leadership about recovering of the energy of Crimea. Also, article tells that “Promsyrieimport” will be used as the trader in the operations, connected with purchase of Iran oil. The enterprise was operatively transferred from the Ministry of the Economic Development of RF and removed into subordination of the Ministry of the Energy. As we see, the field of activity of “Promsyrieimport” changes a little bit. Certain patterns are obvious, in spite of buying of Iran oil and selling to the separatist enclaves light mineral oil are not the same things.

The document, which was managed to photograph by our source, closed to the leadership of “republic”, shows that “Promsyrieimport” deploys a storm of activity on the occupied territory.

“To the chairman of the State Customs Committee of LPR, general prosecutor of LPR, Minister of MIA LPR, Minister MSS of LPR, Chairman of the State Committee of Taxes and Fees of LPR to take under control the question of unhindered passage of POL of firm “Promsyrieimport” through the customs points of LPR”.

Does the leadership of this organization has the plans to capture the market of Petrol and Oil Lubricants of the occupied part of Donbass? A number of the publications on the Ukrainian internet-resources considers this version believable.

Another variant: “Promsyrieimport” imports POL into “republics” especially to provide own activity – the holding of different export-import operations with the production of the metallurgy.

According to the opinion of our source this variant is unlikely. If Russian State Enterprise began to act in the “republic”, not to take under control so superprofitable sphere, as fuel trading is silly and as minimum thoughtlessly. Moreover that fuel trading is the main economic activity of “Promsyrieimport” for today.

We separately notice, that according to our data “Promsyrieimport” acts as an intermediary in Luhansk Region in import operations, connected with purchase of the production of Alchevsk Metallurgical Combine for needs of the Crimean energy.

Something goes wrong…

In spite of economic catastrophe in Donbass, the fuel market of “LPR” in perspective is the volumes of sales, measured in thousands of tons of oil products a month. The leadership of the terrorist enclave needed not only to establish delivery to control effectively fuel market inside the “republic”, it’s desirable to organize own network of fuel sales, agreed, though with several suppliers.

During all the December the problems with shortage of POL were continuing, there were not enough of the commercial import. The main number of the fuel, arrived to “republic” by the railway road, was distributed between social services, rescue rangers, “police”, emergency etc. Wherein the social tension has been continuing to grow   permanently in the society, like cost of the gasoline, which costs more and more expensive in the shadow market. Ukrainian mass media have written a long time ago that terrorist authority is going to control monopolistically the fuel market in “republics”.

And so, “acting of the minister of fuel and energy of LPR” Oleg Yurchenko claimed on December 24, that the network of “people’s” gas stations will appear soon in the young republic. It’s not hard to guess that together with “people’s” supermarkets, these stations will be opened on a base of existed, seized (nationalized) fillings. The separatist “minister” noticed that the number of “people’s refills” will consist 50 units. If believe to data of the “State Committee of Statistics of LPR”, it is more than a half of all gas stations of the young “state”.

At the end of 2015 new head of the “Ministry of Fuel and Energy” uttered a lot of optimistic speeches – about soon overcoming of the fuel crisis, network of the “state” fillings with quality petrol for normal price, soon increasing of a number of supplies, providing “republic” with fuel etc. It could not be unnoticed the application of Yurchenko that strategy store of the fuel in a number of 4 thousand tons was formed in “republic”. Nevertheless, the situation with gasoline was still difficult at the beginning of January on Luhansk refills. Fuel sometimes appeared, but a lack of it still was felt quite sharply.

“Not a big number of people feels pleasure from the cooperation with roguish and arrogant top of “LPR”. The treatment to them became more watchful, when they bilk Kurchenko. Now it will be very hard to overcome fuel crisis, because, I think, if Russian providers work with “power”, they will work for 100% prepay”, our source is sure. For today, a lack of fuel in the “republic” still felt, but petrol is present in young “state”.

“The retail price for 1 litre of 92nd petrol takes 42-44 roubles. But nobody has confidence, that such situation always will be and those who has such an opportunity, are trying to stock fuel”, told one of Luhansk dwellers.

Our interlocutors from locals consider that fuel crisis will be overcome in “LPR” earlier or late, but the condition of existence and doing business in the powerless pseudo state formation are such, that in a closer months the situation with the shortage can repeat.

Prepared under the financial support of Czech Non-Government Organization “People in Need” in the program Transitions of the Ministry of Foreign Affairs of Czech Republic.

Mark Korablev

translated by Denis Bizkitov