The Great Unbundling: Gas Transport System Separates from Naftogaz

Ukraine’s Parliament has adopted a law separating, or unbundling, Ukraine’s gas transport system from the management of the state-owned energy company Naftogaz.

341 MPs voted in favor of the new law. The unbundling has long been a priority for Ukraine’s creditors and partners, such as the IMF, World Bank, and the European Union. The law does not contain any references to privatization, concessions, or anything else regarding the Ukrainian gas transport system, leaving it fully under the government’s ownership.

However, it does create a new state-owned company that will operate the gas transit system separately and without influence from Naftogaz.

The unbundling is a necessary condition for creating a new gas transit contract with Russia under European rules, which state that a single company cannot both be a gas supplier and gas transporter. Russia’s state-owned Gazprom, prior to unbundling, has used this as an excuse to not sign a new gas contract with Ukraine.

Read More: The Question of an Annual $3 Billion: Why Ukraine Needs a Contract With Russia on Gas Transit

“We’ve finally separated natural gas transport from supplying it. This is incredibly important as unbundling is, primarily, the implementation of European gas regulations. And in no circumstances are we going to privatize strategic assets,” commented Ukrainian Prime Minister Oleksiy Honcharuk on the matter.

The Prime Minister also noted that the implementation of this law will help attract investment into the Ukrainian gas transport system, and that it will create a gas transit operator that will operate in full accordance with European regulations.

“This guarantees Europe’s energy security, and strengthens our stability in the international arena. And I will underline this point once more: Ukraine’s gas transit system remains 100% a government asset,” added Honcharuk.