Ukraine should set up a joint venture with Russia’s OAO Gazprom and European companies including E.ON AG and GDF Suez SA to guarantee gas supplies after last month’s dispute, according to Ukrainian billionaire Dmitry Firtash, Bloomberg reported.

Russian, Ukrainian and European investors would each own one third of the company, Firtash said in a Bloomberg Television interview on Jan. 31 in Kiev. He controls 45 percent of Swiss- registered RosUkrEnergo AG, the sole importer of gas to Ukraine since 2006, while his business partner has 5 percent and Gazprom 50 percent.

Gas supplies from Russia via Ukraine to Europe halted for almost two weeks last month amid a spat over prices and transit fees. Russian Prime Minister Vladimir Putin said under an accord signed by the two governments on Jan. 19, that middlemen in the trade will be eliminated.

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“I am convinced that such a consortium should be set up,” Firtash said. “Taking into account that Russian gas goes to Europe, companies such as Germany’s E.ON, Gaz de France and Wingas should be interested.”

Under Firtash’s proposal, Ukraine’s contribution to the venture would be its pipelines, which transport one quarter of the European Union’s annual gas consumption, and which he said may be worth about $20 billion. He said Gazprom should pledge gas fields producing 50 billion cubic meters a year over 25 years, while European companies should invest cash.

Gas Assets

Sergei Kupriyanov, a spokesman for Gazprom, could not be reached for immediate comment when called on his mobile phone outside office hours yesterday. E.ON spokesman Jens Schreiber said he couldn’t comment on its Ruhrgas unit, while Ruhrgas spokesman Helmut Roloff didn’t respond to a message left on his cell phone. GDF Suez spokeswoman Armelle Dillar declined to comment.

Firtash, 43, has a net worth estimated at $3.8 billion, according to Polish magazine Wprost, and has businesses mainly in energy, chemicals and pipeline construction. He consolidated his assets in holding company Group Dmitry Firtash, or GDF, in June 2007.

He made his fortune over the past 15 years, moving to Moscow in the early 1990s and securing his first gas deal with Turkmenistan in 1993 in exchange for food supplies. RosUkrEnergo was set up in 2004 by “top Russian and Ukrainian politicians” to import Central Asian gas into Ukraine, according to its Web site, and has been Ukraine’s monopoly gas supplier since 2006.

Gas Flows

Normal gas flows to parts of Eastern Europe still have not been restored in full since early January, following the disruption which caused shortages in 20 EU countries.

Timoshenko said Ukraine purchased 11 billion cubic meters of gas, which belonged to RosUkrEnergo and is in Ukrainian storage facilities, for $153.90 per 1,000 cubic meters following the accord with Russia. Firtash is challenging that, saying RosUkrEnergo made no sale to the government and the gas is contracted for delivery to Poland, Romania and Hungary.

Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s gas monopoly, has reported receiving only 76 percent of volumes ordered from Russia and other former Soviet countries because of the dispute.

Second Dispute

RosUkrEnergo has filed lawsuits in courts in Switzerland and Sweden claiming the gas back, according to Firtash, and is seeking several hundred million dollars in compensation. In the meantime, it expects to restore full supplies to its consumers in Eastern Europe “within the next two to three weeks,” and is in talks to borrow gas from Gazprom, he said.

“Our gas would allow Timoshenko’s government to reduce prices for Ukraine’s domestic consumption by about $40 per 1,000 cubic meters, to average between $240 and $250 per 1,000 cubic meters this year,” Firtash said. “Ukraine is unable to pay that high price.”

Naftogaz spokesmen Valentyn Zemlyanskyi and Ilya Savvin could not immediately be reached on their mobile phones outside business hours yesterday.

The third investor in RosUkrEnergo, alongside Gazprom and Firtash, is Ivan Fursin, a long-time business partner of Firtash, who controls 5 percent of the trading company.

Gas Partnership

Ukraine depends on imported fuel for 70 percent of its needs, and last month’s dispute with Russia was the second in three years. In January 2006 Gazprom’s gas shipments to Ukraine were cut for three days, leading to shortages in EU countries, including Hungary and Austria.

Firtash’s proposal for a joint venture involving European companies echoes an idea which was under discussion during the last month’s dispute.

Putin met representatives of GDF Suez, E.ON Ruhrgas AG and Eni SpA in Berlin on Jan. 16 to persuade them to form a group that would buy gas needed to permit Ukraine’s pipeline system to operate.

Eni at that time backed Putin’s initiative, which was designed to meet short-term conditions demanded by Naftogaz and Gazprom to complete bilateral accords. Russian Deputy Prime Minister Igor Sechin said E.ON Ruhrgas, BASF SE’s Wingas and GDF Suez were also backing the idea of a gas partnership, while E.ON Ruhrgas, Germany’s biggest gas provider, said more talks were needed.

Chemical Companies

The conclusion of an accord signed between Russia and Ukraine three days later made an interim solution unnecessary.

Firtash, whose comments this weekend revive the idea in a longer-term form, also owns companies including Hungarian gas trader Emfesz Kft, Vienna-registered Zangas Hoch-und Tiefbau GmbH, which repairs and builds pipelines, and OSTCHEM Holding AG, which controls chemical companies, according to GDF’s Web site. He additionally has real estate assets.

Firtash said Nov. 7 he plans also to acquire a majority stake in VAT Bank Nadra, Ukraine’s seventh-biggest bank by assets, to diversify and expand his business.

Firtash was born in the village of Bohdanivka, in western Ukraine, the only child of a driving instructor and an accountant at a local sugar beet processing plant. He graduated from Donetsk technical school in 1984, served in the army and then worked as a fireman in Chernivtsi before moving to Moscow and sealing his first gas deal.