Naftogaz estimates Ukraine's GTS at US$12.5 bln

National Joint-Stock Company Naftogaz of Ukraine has approved the cost of the state-run gas transport system operator Ukrtransgaz at UAH 327.9 billion (US$12.5 billion).

Deputy Head of Department at Naftogaz of Ukraine Oleksiy Khabatiuk posted a photocopy of the relevant decision on Facebook.

The evaluation was approved based on the report made by Ernst & Young.

It is noted that the specified sum includes Ukrtransgaz assets worth UAH 12.3 billion ($470.4 million), located on temporarily uncontrolled territory of Ukraine.

Read alsoRussia's Gazprom failing to fulfill obligations under gas transit contract – Naftogaz envoyAs UNIAN reported earlier, in early November 2016, the Cabinet of Ministers adopted a decision on the creation of new operator of Ukraine's gas transmission system (GTS), namely PJSC Magistralni Gazoprovody Ukrainy [Trunk Gas Pipelines of Ukraine]. At the same time, Naftogaz management created a new subsidiary, the Operator of the Ukrainian GTS, within the structure of Ukrtransgaz.

Naftogaz believes that the establishment of a new legal entity and the involvement of a European partner in its management is necessary that European companies be able to buy gas on the eastern border of Ukraine and transfer it to the European market, preserving transit volumes after the current contract with Gazprom expires.

In late February this year, Naftogaz received the final award of the Arbitration Institute of the Stockholm Chamber of Commerce related to the lawsuit filed by the Ukrainian company against Russia's gas monopoly Gazprom, according to which the latter shall pay $4.63 billion to Naftogaz. In total, Gazprom owes the Ukrainian company $2.56 billion.

At the same time, the Stockholm Arbitration retained Naftogaz of Ukraine as a counterpart of Russia's Gazprom in the gas transit contract.

Read alsoNaftogaz to recover losses through court if Gazprom fails to fulfill gas transit obligationsThe transfer of the transit contract to the new operator was important for Naftogaz unbundling reform and creation of a new independent GTS operator.

UNIAN memo. NJSC Naftogaz of Ukraine is the largest state-run vertically integrated oil and gas holding whose subsidiaries account for about 90% of oil and gas production in Ukraine. Naftogaz develops oil and gas fields, produces crude oil and natural gas. Its core business is also transportation and trade in fuel through its own network of filling stations.

Naftogaz of Ukraine owns 100% of Ukrtransgaz shares. Ukrtransgaz operates 12 underground gas storages (USFs) with a total working capacity of about 31 billion cubic meters. The company is also the operator of the main gas pipelines, through which natural gas is exported from the Russian Federation to the EU states. The company annually buys about 2 billion cubic meters of gas, which is used for the GTS technological processes.