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Susan Simpson Oct 6
To follow up on my thread from yesterday, here is a quick and dirty primer on why LNG deals are at the heart of the Ukraine scandal. And why Trump is trying to blame Perry for the whole mess.
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Susan Simpson
Let's start with Lev Parnas and Igor Fruman of Global Energy Producers, LLC. The short story: they're professional scammers. The long story: start with the OCCRP's great profile of the pair, , as well as the Miami Herald article: .
Two South Florida businessmen from the former Soviet Union could find themselves dragged into an impeachment inquiry targeting President Donald Trump over their political activities in Ukraine.
Miami Herald Miami Herald @MiamiHerald
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Susan Simpson Oct 6
Replying to @CampaignLegal
Also check out 's complaint against Fruman and Parnas: , and
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
The professional background of Parnas and Fruman is mostly in scamming, with a particular focus on scams involving luxury goods, real estate, and movies. One of Parnas's companies is named "Fraud Guarantee," which is a pretty straightforward description of his business practices.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Parnas also has a company called "Loan Crime Investigative." Though, to be fair, loan crimes do seem to be something Parnas actually has a great deal of experience in.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
One thing Parnas and Fruman do *not* have a background in is energy. So it is strange that, in 2018, they opened Global Energy Producers, LLC. A company that is, allegedly, "transacting in LNG, oil and gas and solar energy energy."
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
GEP's business model is "capitaliz[ing] on opportunities around the world by leveraging domestic and international relationships." In particular, as GEP stated to the Daily Beast, GEP is involved in exports of American LNG.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
There is no public record of GEP doing any actual business. In fact, the only public record of activity by GEP is making large donations to Republican candidates and PACs. Which makes total sense, because GEP is in no way capable of doing any real energy business on its own.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
As Parnas and Fruman told one investor, who later sued them, GEP's business model is to make large donations to conservative politicians, which "garnered substantial goodwill with various powerful political allies that would greatly assist the business of Defendant GEP."
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Parnas and Fruman "partner with industry leaders" (i.e., actual energy companies) and use their connections to Trump (i.e., paying for Trump's personal attorney to represent them in Ukraine, while he also represents Trump in Ukraine) to obtain energy contracts for their partners.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
It will be GEP's partners, whoever they are, that will actually be performing under any LNG export contracts that ultimately come together. And, for GEP's efforts in making the deal come together, GEP will presumably get a cut of it.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Who exactly are GEP's "partners"? We don't know, but it matters. A lot. These LNG deals are arguably more political than economic in nature. And for the deals to happen, the US government has to be trying to make them happen. So who is paying Giuliani to make them happen?
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Since Trump came into office, US LNG exports have quintupled. That's not an accident – Trump believes that foreign reliance on American LNG exports can be used to achieve US foreign policy objectives, as well as to "fix" the US trade deficits he so despises.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
American LNG generally can't compete on price with European energy, so this massive increase in US exports has only been achieved with the help of US foreign policy. Trump has been particularly heavy-handed in how he pressures foreign states to import American LNG.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
And Rick Perry, who is taking the name of his agency very literally, has been a major part of connecting US LNG exporters to European markets.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
The foreign markets that are importing US LNG have their own policy reasons for seeking out alternative energy sources, so it's not all about American pressure. But also, if they don't buy more expensive American LNG, Trump will punish them with tariffs.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Now, back to Ukraine. Ukraine, in many ways, is an attractive market for a new energy supplier. Geographically speaking, Russia would be the logical supplier. Except, there's the whole invading them and seizing their territory thing. So relying on Russia for energy is a no go.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Which is why, when Ukraine elected a new president, the Trump administration's response was to deploy Rick Perry. Perry attended Zelensky's inauguration, along with Sondland and Sen. Johnson, to immediately begin negotiating the terms under which Ukraine would buy American LNG.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Now, the major benefit of American LNG is that it doesn't come from Russia. But the major drawback of American LNG is that not only is it traveling a lot further than natural gas from Russia, it also has to be liquefied for transport, and then regassified at the other end.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Ukraine is already at a disadvantage, because the nat gas it's importing is coming from Europe after Europe gets it from Russia, so there's already a mark up. But even still, American LNG is a lot more expensive. Which means if Ukraine is buying it, it's not about economics.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Hence the ongoing campaign by Rick Perry to negotiate terms with the new Ukrainian administration under which it will agree to buy American LNG. It's not just about price – any LNG deal is part of a bigger package, and other diplomatic concessions are going to be on the table.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
There's another problem here, though. Ukraine can't actually import LNG. Not directly. You need a terminal for that, and Ukraine doesn't have one. But Ukraine's neighbor Poland has one. And Poland recently signed a 20 year contract to import US LNG.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
And then there's a second problem. Even if Ukraine buys its Freedom LNG from Poland, the gas still has to be transported from Poland to Ukraine. While pipelines do exist, their total capacity is limited.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
For Ukraine to import more than a trickle of American LNG, the best short-term solution is probably to build more pipelines between Poland and Ukraine. But then there's a third problem. Those pipelines? Way, way more expensive for Ukraine than for Poland.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
And this, I think, may be the genesis of Trump's attempts to blame Perry for the Zelensky call. Because one of the sticking points in the negotiations for a new LNG deal in Ukraine was who was going to bear the cost of all those extra miles of pipeline on the Ukrainian side.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Ukraine, not unreasonably, wasn't thrilled about the idea of not simply paying a premium for American LNG, but then on top of that paying even more for the privilege of a new pipeline that will allow Poland to sell them the American LNG at a mark up that Poland profits from.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
So when Trump says that Perry told him to make the call to Zelensky because of "something about an LNG plant," I think Perry wanted Trump to pressure Ukraine to going ahead and commit to building its side of the new pipeline.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Trump, notably, failed to actually bring up the LNG issue in his call. Perry may have requested it, but Trump chose to ask about Biden and the 2016 election instead. And for a month after that, no progress was made on the American LNG deal.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
And here's where things get dark. On August 29th, Ukraine learned that Trump was intentionally holding up $250M in much-needed foreign assistance for its military. Zelensky's aides immediately begin reaching out to the American side for updates on what was going on.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Two days after learning that Trump had blocked foreign assistance, Ukraine reversed course and agreed to terms to buy American LNG. Even though Trump cancelled his trip, Rick Perry continued on to Warsaw to sign the trilateral memorandum between the US, Poland, and Ukraine.
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Susan Simpson Oct 6
Replying to @TheViewFromLL2
Welp, I just saw the AP story. So I guess the good news is I can cut this tweet thread short, since there's no need for me to speculate anymore.
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