Energy, Europe, Sanctions, Top Stories

Ukraine gas lobby hires PR help to press Biden on Russian pipeline to Europe

Ukraine’s oil and gas lobby has hired public relations help to improve its reputation and pressure the Joe Biden administration to recommit to stopping Russia’s Nord Stream 2 pipeline to Europe.

The Ukrainian Federation of Employers of the Oil and Gas Industry has retained New York-based Karv Communications for help “improving the image of the oil and gas industry of Ukraine” and “promoting energy security issues in the US economic and political media,” including “Nord Stream 2 related sanctions.” The contract is for $420,000 and runs for seven months, from July 1 through Jan. 31, 2022.

The PR push covers media outreach in the US, Canada and the United Kingdom and comes a little over a month after the Biden administration waived congressionally mandated sanctions on pipeline developer Nord Stream 2 AG and its CEO Matthias Warnig, infuriating both Kyiv and members of both parties on Capitol Hill. Kyiv views the pipeline as a grave economic and strategic threat, as it would allow Russia to bypass Ukraine in providing energy to western Europe and make it easier for Moscow to cut off natural gas flows to Ukraine if relations deteriorate.

Ukraine hopes the US can still stop the pipeline from becoming operational while simultaneously trying to reassure Washington that it is effectively dealing with a history of corruption and political interference in it own energy sector. Issues of corporate governance are once again making headlines following this spring’s replacement of longtime executive Andriy Kobolyev with acting Energy Minister Yuriy Vitrenko at the helm of national oil and gas giant Naftogaz.

“When it comes to the western media, there are two issues that are likely to be highlighted,” said Igor Novikov, a former adviser to Ukrainian President Volodymyr Zelensky. “One, first and foremost, is the situation with Nord Stream 2. But there’s also a second issue, which has to do with a corporate governance at Naftogaz. And I think we’re going to see certain parts of that internal struggle highlighted in the media.”

Karv and the Ukrainian oil and gas federation did not respond to requests for comment about the PR contract. But experts tracking the issue point out that the White House immediately responded last month when President Zelensky told Axios that he was “surprised” and “disappointed” by the Biden administration’s decision to waive sanctions. The very next day, President Biden got on the phone with the Ukrainian leader and invited him to visit Washington this summer.

“No one’s blind to the fact that Zelensky had a lot of success with his (interview),” said Paul Massaro, a senior policy adviser with the Helsinki Commission, an independent commission of the US government. “There is a general feeling that this administration, as opposed to the last administration, is rather terrified of being caught with its pants down or embarrassed or called out in any way.”

The Ukrainians, he added, probably “feel like they’re losing this fight, so they’re going to start throwing more money at the problem. And they’re right. They are losing the fight.”

Karv President Andrew Frank, Executive Vice President Eric Andrus, Senior Vice President Kevin Nolan and associate Will Sommer are registered on the account. Joining them as a subcontractor is Adrian Karatnycky, a former president of Freedom House and until recently a senior fellow with the Atlantic Council who runs the Myrmidon Group, a Ukraine-focused consultancy in New York. Two other Atlantic Council scholars, McLarty Inbound‘s Richard Burt and Frances Burwell, are lobbying on the other side of the issue.

Karatnycky tells Foreign Lobby Report that he took leave of the Atlantic Council to avoid conflicts of interest. He shared an email he sent on July 8 to Atlantic Council President Frederick Kempe and former US Ambassador to Ukraine John Herbst, the director of its Eurasia Center.

“I write to ask that I be relieved of the position of Senior Fellow at the Atlantic Council as of the close of business tomorrow July 9th,” Karatnycky wrote. “Next week I will begin an assignment as a Senior Advisor to KARV Communications, a position that will involve work for the Ukrainian Federation of Employers of the Oil and Gas Industry and NAFTOGAZ, and will require filing under FARA. As my work may raise the appearance of conflicts of interest with my work on Russia and Ukraine, it is proper that I exit the Atlantic Council.”


Ukraine president’s party hires US lobby shop

In addition to the new PR focus, the Ukrainian gas industry has also seen changes to its lobbying operation following Biden’s election.

Since January 2020, the federation has had a $960,000-a-year contract with Yorktown Solutions, a firm led by Daniel Vajdich, a former Republican aide on the Senate Foreign Relations Committee (SFRC) and adviser to the 2016 presidential campaign of Texas Republican Sen. Ted Cruz (Yorktown previously lobbied for Naftogaz, Ukraine’s largest energy company). Earlier this year Yorktown hired former SFRC Democratic staffer Brittany Beaulieu and added her to the account.

At least three firms are lobbying on the other side of the issue, spending a combined $1.05 million in the first quarter of 2021:

  • Roberti Global has represented Nord Stream 2 AG, the Swiss-based company owned by Russia’s Gazprom, since July 2017 and disclosed $600,000 in the first quarter of 2021. The firm’s founder Vincent Roberti lobbies on the account;
  • BGR Government Affairs also represents Nord Stream 2 AG. BGR International Practice head Walker Roberts has been the sole lobbyist on the account since its inception in April 2020. BGR disclosed $240,000 in payments from the company in the first quarter of 2021;
  • Finally, McLarty Inbound has lobbied since August 2017 for the five energy companies with which Nord Stream 2 AG has signed financing agreements: Austria’s OMV Aktiengesellschaft, Germany’s Wintershall Dea and Uniper, France’s Engie, and Shell International of The Netherlands. Former US Ambassador to Germany Richard Burt lobbies on the contract along with Francis Burwell, a senior director at McLarty and distinguished fellow with the Atlantic Council’s Future Europe Initiative. In the first quarter, the firm reported $60,000 each in payments from OMV and Wintershall and $30,000 each from the other three firms, for a total of $210,000.

Update: This post was updated on July 15 to note Adrian Karatnycky’s departure from the Atlantic Council.