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Ukraine to break up Naftogaz, offer gas transport assets to western investors — PM

March 12, 2015, 18:39 UTC+3 KIEV
The throughput capacity of the Ukrainian gas transportation system is 288 billion cubic meters at the entrance
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© ITAR-TASS/Maxim Nikitin

KIEV, March 12. /TASS/. Ukrainian Prime Minister Arseniy Yatsenyuk said on Thursday his government intended to break up national energy company Naftogaz by the yearend and exclude the country’s gas transportation system from state ownership, transferring some assets to "respected Europeans and Americans" for management.

"We’re turning to all of our Western partners: the law on the gas transportation system's modernization and operation has been adopted. Respected Europeans and Americans, you have a possibility to become shareholders in the Ukrainian gas transportation system," Yatsenyuk said at a meeting devoted to 100 days of the government’s work.

Until the end of the year, Ukraine needs, first of all, to "maximally switch to gas from the EU, secondly, pump in cheap gas during a warm period and, thirdly, complete Naftogaz’s division into three companies," the Ukrainian prime minister said.

The throughput capacity of the Ukrainian gas transportation system is 288 billion cubic meters at the entrance and 178.5 billion cubic meters at the exit, including 142.5 billion cubic meters to European countries and 3.5 billion cubic meters to Moldova.

Ukraine's gas transportation system consists of 72 compressor stations, 110 production shops and 1,451 gas distribution stations. The overall length of gas pipelines operated by Naftogaz is 38,600 kilometers, including 22,200 kilometers of trunk pipelines and 16,400 kilometers of extensions.

Ukraine’s major gas suppliers are currently Russia and European countries that resupply Russian natural gas in a reverse-flow mode.

Infographics Russia's gas pipelines to Europe by 2018 Russia's gas pipelines to Europe by 2018

Russia's gas giant Gazprom intends to completely abandon gas supplies to Europe through Ukraine after 2018 with the help of a new pipeline to Turkey. Infographics by TASS

Ukraine imported 4.1 billion cubic meters of natural gas over the past two months, including 2.3 billion cubic meters from Europe, according to data provided in March by Ukrtransgaz gas pipeline operator, a subsidiary of the Ukrainian national energy company Naftogaz.

In the same period last year, Ukraine also imported 4.1 billion cubic meters of natural gas but the entire volume came from Russia.

In February, Ukraine imported 2.1 billion cubic meters of gas. Reverse-flow gas supplies from EU countries totaled 1.2 billion cubic meters, including 1.1 billion cubic meters from Slovakia, 100 million cubic meters from Hungary and 60 million cubic meters from Poland. Russia supplied 900 million cubic meters of natural gas over that month.

Ukraine’s annual gas consumption amounts to about 50 billion cubic meters.

The proposal on Naftogaz’s division and the admission of foreigners to its management has been prompted by the company’s gigantic debt.

As of early 2015, Naftogaz’s budget deficit totaled $6.8 billion, exceeding the country’s $4.5 billion budget deficit, according to data provided by Yatsenyuk earlier.

Ukrainian Deputy Finance Minister Igor Umansky has said Naftogaz’s budget deficit can be narrowed to $2 billion in 2015.

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