Naftogaz of Ukraine NJSC CEO Yuriy Vitrenko has outlined the steps he plans to take in order to combat corruption at Naftogaz Group enterprises,during an appearance on Ukrainian TV show Velyka Pyatnytsya (The Great Friday) on Ukraine-24 channel
Naftogaz of Ukraine NJSC CEO Yuriy Vitrenko has outlined the steps he plans to take in order to combat corruption at Naftogaz Group enterprises,during an appearance on Ukrainian TV show Velyka Pyatnytsya (The Great Friday) on Ukraine-24 channel.
These steps include a transition towards standardized agreements, the use of state-regulated trading platforms, the involvement of reputable foreign partners, and the prevention of intermediary schemes.
“Much needs to be done in different units of Naftogaz. For instance, a move towards transparent and understandable counter-parties, a transition to standardized contracts. Cunning dealers are everywhere. They want to buy something using kickbacks, bribes, opaque schemes. The whole world is moving through standardization and transparency, through the use of special trading platforms that are regulated by the state,” Vitrenko stressed.
He cited the situation in 2014, when Naftogaz had to urgently conclude contracts for gas supply from European countries because the Russian Federation refused to supply gas to Ukraine, as an example of anti-corruption actions that have proven their effectiveness. “There were previously intermediary companies operating between Ukraine and Russia. Rosukrenergo is a well-known example, when the company’s owner, the oligarch Dmytro Firtash, bought gas in Asia or directly from Gazprom and then resold it to Ukraine, using these funds to buy newspapers, TV channels, and mineral fertilizer plants. When Russia cut off gas supply in the summer of 2014, we had no choice but to buy gas in Europe."
"Some were coming to us and offering to create their own intermediary to supply gas. We refused and did our best to make Naftogaz deal exclusively with transparent professional companies. Time has shown that this was the right decision. We did not buy gas at so-called negotiated prices, but at a price connected to the European market, i.e. transparent and liquid. It was no longer possible to agree to buy gas for USD 200 per tcm when it cost USD 170 on the stock exchange. Previously, intermediary prices had nothing to do with market prices. Instead, prices were based on political agreements that nobody understood. This led to billions in losses for the state,” said the Naftogaz CEO.
According to Vitrenko, a decision has been reached to use the standard contracts of the Federation of European Energy Traders in order to prevent attempts to make some contracts more or less profitable, even in the presence of a transparent price. “Such steps, and not declarations, minimize corruption. First of all, this will remove opportunities to steal.”
Vitrenko also stressed that the involvement of foreign partners helps to reduce corruption: “One of the problems is the closed nature of companies. As soon as the manager gets in position, he starts behaving like the head of a separate state and does not want to permit any partners who might create competition. If foreign partners arrive, it is no longer possible to hand out tenders to friends and inefficiencies will become obvious, for example.”
Vitrenko noted that the Group has great potential for partnerships. Cooperation with the international company Expert Petroleum is one successful example that contributes to the growth of gas production. “This is an effective partnership that we will develop. It involves professionals who have demonstrated their faith in Ukraine and believed in partnership with Naftogaz. They are now reporting significant increases in production. I will do my best to establish more such partnerships in the near future and more foreign investments that will allow us to increase production,” said the Naftogaz CEO.
Integrated Communications Department
NJSC Naftogaz of Ukraine
NJSC Naftogaz of Ukraine