A fully functional and separate TSO of Ukraine is to be created by January 1, 2020 / Photo from UNIAN

National joint-stock company (NJSC) Naftogaz of Ukraine has registered a new company, LLC Operator of the Gas Transmission System of Ukraine, which is wholly owned by Ukrtransgaz JSC, as part of unbundling.

The operator was singled out as a separate entity as part of the next stage of the unbundling of the transmission system operator to attract a European partner to its management, which is expected to help maintain the volume of transit shipments via Ukraine after the current gas transit contract with Russia's gas giant Gazprom expires, Ukrtransgaz's press service said in a statement on February 4.

"The next phase included in the roadmap of the unbundling of the transmission system operator (TSO) was successfully completed – the new company is registered under the name 'Gas Transmission System Operator of Ukraine," it said.

Read alsoKobolyev considers Naftogaz's unbundling as condition for further gas transit via Ukraine

Legal unbundling of the gas transmission operator as a critical milestone of the unbundling was presented by the supervisory boards of Naftogaz and Magistralni Gazoprovody Ukrainy (MGU) at the meetings in September and December in 2018.

The decision on formation of LLC Gas Transmission System Operator of Ukraine was accepted by NJSC Naftogaz of Ukraine on January 29, 2019, as a shareholder of the Ukrtransgaz JSC based on the Law of Ukraine on Join Stock Companies.

Pawel Stanczak, ex-Vice-President of Ukrtransgaz, was elected General Director on the terms of a fixed-term employment contract.

The launch of the Gas Transmission System Operator of Ukraine will allow the proceeding to the next steps in the process of unbundling of the TSO including the involvement of foreign partners, application for the conditional certification and transmission of the necessary assets.

After the completion of all stages, the creation of a fully functional and separate TSO of Ukraine on January 1, 2020, is scheduled.

As was reported, early in November 2016, Ukraine's Cabinet of Ministers decided to create a new entity, the MGU, while Naftogaz's management created the TSO as part of its subsidiary, Ukrtransgaz.

Singling out the gas transmission system as a new legal entity and attracting a European partner to its management are necessary for European companies to be able to buy gas on the eastern border of Ukraine in future for its further supply to the European market in transit. Thus, gas transit volumes will remain after Ukraine's contract with Gazprom expires in 2020.