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Naftogaz CEO named obstacle impeding attraction of foreign partners

Western companies do not need "toxic" non-core assets.

The CEO of Naftogaz Ukrayiny, Andriy Kobolev, says the transfer of underground gas storage facilities and non-core assets over to the newly created company Mahystralni Gazoprovody Ukrayiny (the Trunk Gas Pipelines of Ukraine) would alienate potential foreign partners in the management of the Ukrainian gas transportation system (GTS).

"Our negotiations with four foreign companies that are interested joint management of the Ukrainian GTS show that these players may lose interest in becoming our partners if underground storage facilities and non-core assets are transferred to PAO MGU. These assets are too 'toxic'. I fear that this will mean that the EU will soon get disappointed in its attempts to become our partner and will opt for partnership in the Nord Stream-2. This will mean that by 2020 we will talk our GTS in approximately the same terms as we are talking now of our oil refineries, ie as scrap," Kobolev told a press conference on Wednesday, 17 January.

Earlier, Naftogaz signed memorandums of intent with Netherlands Gasunie, French GRTgaz, Italian Snam, and Slovak Eustream regarding the joint use of Ukrainian GTS.

In the summer of 2016, the Cabinet of Ministers approved a plan divesting Naftogaz Ukraine from the function of transporting gas by main gas pipelines. The decision was made in pursuance of the Third Energy Package of the EU and the law and the natural gas market. The Third Energy Package prohibits companies from simultaneously selling and transporting gas and electricity. To resolve this problem, companies were asked to sell transport networks or give their management over to independent operators.

In a year, the Cabinet approved a list and plan for transferring the assets of the gas transportation system from Ukrtransgaz to MGU. Under the plan, the transfer of gas transportation assets to MSU should be carried out 30 days after the enforcement of the decision of the Arbitration Institute of the Stockholm Chamber of Commerce in the Naftogaz-Gazprom dispute over the 2009 - 2019 contracts.

Last December, a branch of Ukrtransgaz titled GTS Operator of Ukraine (OGTSU), started working. The company that is the single decision-making centre for the management of the national gas transportation system already services over a thousand gas transportation contracts.