01 July 2016, 15:09 / Business / News

The Ukrainian government decided to divide Naftogaz

The Ukrainian government today adopted a plan to restructure Naftogaz by separating its natural gas transportation and storage activities. According to Energy Minister Igor Nasalik, the decree provides, in accordance with the Third EU Energy Package, the removal of gas transportation and storage activities from the functions of Naftogaz.

In 2015, the Verkhovna Rada of Ukraine adopted the Law “On the Natural Gas Market”, which provides for the reform of Naftogaz by separating the functions of gas transportation through main gas pipelines, its injection and storage in underground gas storage facilities (UGS) and gas sales. Now these three functions are performed by Naftogaz and its subsidiaries.

On Thursday, the head of Naftogaz, Andrei Kobolev, said that the company’s restructuring plan, submitted for government approval, had been agreed upon with the Secretariat of the Energy Community and would allow the gas transportation system to be completely separated from the competence of Naftogaz within about a year.

This week Naftogaz said that Russian gas supplies to Europe via the traditional route through Ukraine in 2020 will be several times more profitable than via the Nord Stream 2 pipeline. Naftogaz claims that if 110 billion cubic meters are transported through Ukraine. m of gas per year, then the cost of transportation will be four times cheaper than transportation via Nord Stream 2, and in the case of delivery of 70 billion cubic meters. m - three times cheaper. A change in route could lead to disruptions in gas supplies to the countries of Central, Eastern and Southern Europe, as well as to Turkey, whose gas transportation infrastructure is tied to the current route and has a weak connection with the German gas network, where Nord Stream 2 leads, or does not have her at all, the company indicated.