Supervisory boards of Naftogaz and Magistralni Gazoprovody Ukrainy (MGU) have signed a Memorandum of Understanding regarding the unbundling of Ukraine’s gas transmission system operator (TSO). The document concluded in July, is now available on Naftogaz’ website. MGU has been created by the Ukrainian government as the future gas transmission system operator and has, like Naftogaz, a Supervisory board with a majority of independent members.
The purpose of the Memorandum is to set out the common understanding of Naftogaz and MGU as to the process and interim steps to be undertaken to achieve the goal of the TSO ownership unbundling in full compliance with Ukraine’s international commitments and national legislation by 1 January, 2020. The document aims to introduce clarity on the unbundling process given Gazprom’s refusal to accept the new regulatory framework in Ukraine and amend the transit contract with Naftogaz accordingly. The contract expires on 31 December 2019.
The supervisory boards agreed that prior to this date any loss of control by Naftogaz or Ukrtransgaz over the assets associated with gas transit without Gazprom’s consent would create substantial financial risks. It could also pose material risks to the reliability of gas supplies to European consumers. Gazprom’s unwillingness to cooperate therefore defers any possibility of ownership unbundling to 1 January 2020.
“With this document, both Naftogaz and MGU boards demonstrate our commitment to work collaboratively to make the unbundling happen while ensuring operational efficiency of gas transmission”, said Clare Spottiswood, chairperson of Naftogaz’ Supervisory board and Walter Boltz who chairs the Supervisory board of MGU. “Reaching this understanding is a solid step on the way to unbundle the TSO by 1 January 2020. We set as our first priority the need to guarantee security of supply for Ukrainian gas consumers and assure uninterrupted gas transit to Europe.”
The parties have agreed that the unbundling process will be coordinated by the Ethics and Unbundling Committee of Naftogaz’ Supervisory board, with representatives of the MGU Supervisory board acting as advisors to the Committee.
Within this framework the Supervisory boards expect to develop and propose to the government of Ukraine their joint plan regarding the interim steps required to unbundle the TSO on 1 January 2020.
Corporate Communications Department
NJSC Naftogaz of Ukraine