KIEV, Feb. 13 – Prime Minister Yulia Tymoshenko’s government on Wednesday published its resolution effectively putting an end to UkrGaz-Energo, a key natural gas supplier accused of non-transparent gas transactions.
The resolution was approved on Feb. 6, but its publication had been delayed for almost a week until after Ukrainian and Russian leaders had agreed in principle to replace the company.
UkrGaz-Energo was made by the government of Prime Minister Viktor Yanukovych the dominant gas supplier to Ukrainian industrial consumers, reselling 55 billion cubic meters of gas in Ukraine.
The Tymoshenko government attacked UkrGaz-Energo in January by reducing the amount of gas that the trader had been allowed to sell this year from 55 billion cu m to 5 billion cu m.
Tymoshenko has been seeking to eliminate UkrGaz-Energo to allow all domestic gas supplied be handled by Naftogaz Ukrayiny, the national oil and gas company.
The plan is to improve financial standing of Nafogaz, which had posted almost $1 billion in losses in 2007 partially due to the fact that UkrGaz-Energo had monopolized gas supplies to lucrative industrial sector.
The government’s another resolution, published on Wednesday, specifically names Naftogaz as the sole supplier of gas to the industrial sector, including power generating companies, gas distributors and other consumers.
The government also stipulated that Naftogaz is authorized to handle exports of gas that are produced by its gas extracting arm, UkrGazVydobuvannia, or UGV.
Naftogaz was expected to export a tiny amount of gas, about 9 million cubic meters this year, compared with about 15 billion cubic meters UGV is expected to produce.
The exports of gas to Europe could become the most profitable line of business for Naftogaz, which is extremely important as the government seeks to improve its finances.
Meanwhile, the rapid replacement of UkrGaz-Energo with Naftogaz as the only gas supplier to the industrial sector may clash with earlier declared plans to create a new joint venture between Gazprom and Naftogaz.
President Viktor Yushchenko and his Russian counterpart Vladimir Putin agreed in principle Tuesday to create a new 50-50 joint venture between Gazprom and Naftogaz to handle UkrGaz-Energo’s business.
Gazprom owned 25% in UkrGaz-Energo through another joint venture, RosUkrEnergo, in which the Russian gas monopoly owned 50%. (tl/ez)