Naftogaz Rating Flat; CEO Extends Contract

Fitch Ratings has extended its 'B' with positive outlook for Naftogaz Ukrainy, the state-owned company said April 3. The agency mentioned a number of factors "including the strategic importance of Naftogaz, expected profitability, foreign exchange risks, gas transit business unbundling, regulatory risks and focus on domestic market." 

Also in its statement the previous day, Fitch mentioned the "likely deterioration of its financial profile owing to expected volatility in operations after the unbundling; expected 2020 earnings decrease due to significantly weaker gas prices; uncertainty over domestic price regulation; and macro-economic challenges as a result of the Covid-19 pandemic."

Separately, at the end of March, the cabinet of ministers supported the decision of Naftogaz's supervisory board to extend the contract with Andriy Kobolev as the group's CEO. The contract has been prolonged by four years till March 2024, with an initial public offering of the company to be one of his objectives.

Kobolev's other key performance indicators are to maintain solid cash generating ability; lower the reliance on imported gas through increased domestic production and greater energy efficiency; and expand the group’s proved and probable reserves. 

Naftogaz is sticking to its operating efficiency priorities: lower operating expenditures, capital discipline and transformation activities, it said. The group is preparing for a gas market liberalisation May 1, when temporary regulated terms set by the government, including the public service obligation, expire.