Public JSCs Ukrainian GTS and Ukrainian Gas Storages Facilities to be created on the basis of Naftogaz

The Government of Ukraine will make a decision on the reform of NJSC Naftogaz Ukrainy and establishment of two additional companies – public JSCs Ukrainian Gas Transportation System and Ukrainian Gas Storages Facilities on the basis of NJSC Naftogas, Ukrainian PM Arseniy Yatsenyuk said at a session of the Verkhovna Rada of Ukraine on Tuesday, June 3.

The PM noted that this require the Third Energy Package, the Energy Charter Treaty and our liabilities from Ukraine’s membership in the Energy Community.

PJSC Ukrainian Gas Transportation System will be responsible only for the gas transportation, and PJSC Ukrainian Gas Storages Facilities will be only the operator that will work with all entities in the field of storing and selling natural gas."

The Prime Minister emphasized that the Ukrainian side has applied to the European Union and the United States with the project for joint operations and modernization of the Ukrainian gas transport system: "We believe that the European and American investors should be attracted to modernization, and operation of the Ukrainian GTS. This is why we are creating public joint-stock company Ukrainian Gas Transportation System."

Arseniy Yatsenyuk stressed the need to reform the energy sector as a whole. According to him, over the past five years Ukraine has not seen investment increase into domestic production, thus "the situation as to domestic production is extremely difficult: "Just to keep at least the volume of domestic production, we need a significant investment in the construction of booster compressor stations, and output increase requires billions of investments in drilling. Drilling takes at least a year, maximum - two years, depending on the amount of investments. UAH 2.2 billion provided during the current year is a drop in the ocean."

"That's why one of the most key elements is to attract foreign companies as well as the Ukrainian company Ukrgasvydobuvannya and increase investment in order to raise the maximum amount of domestic gas production," said the Prime Minister.

With regard to energy policy, Arseniy Yatsenyuk emphasized that it must consist of two parts: "we produce more, while consume less." According to him, the main consumers are the private sector and heating utility companies: "Heating utility companies have not enough own gas and therefore we need to buy 8.2 billion cubic meters of imported one", he explained.

In this regard, stressed Arseniy Yatsenyuk, the Government had to raise rates: "But at the same time we must first invest in heating utility companies in order to reduce costs as well as increase efficiency of the Ukrainian energy system.”