Ukraine to Break Up Naftogaz

Ukraine to Break Up NaftogazUkraine to Break Up Naftogaz

Ukrainian Prime Minister Arseniy Yatsenyuk said 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, TASS reported.

"We’re turning to all of our Western partners: the law on the gas transportation system's modernization and operation has been adopted," Yatsenyuk said. 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 added.

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.

The proposal on Naftogaz’s division and the admission of foreigners to its management is 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.

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.