Naftogaz to Restructure
Ukrainian Prime Minister Mykola Azarov has announced on Friday that the Ukrainian government is planning a restructuring of state energy provider Naftogaz Ukrainy.
Speaking at the T. Shevchenko National University in Kiev, Azarov said that "Naftogaz Ukrainy as a business entity will cease to exist," and that its role and place in the market will be replaced with new companies.
Azarov said the government will restructure Naftogaz, and spin off its gas production division through a public listing, potentially raising $5- 10 billion in investment funding.
"We have decided to restructure Naftogaz, to separate its gas production company, to prepare it and to allocate its shares on a public exchange," said Azarov adding, "Our estimate is that we should receive a very serious investment resource of around $5 billion-$10 billion."
Naftogaz has brought McKinsey & Co to advise on selecting a lead manager for a proposed offering.
Azarov said that the move which will lead to the revision of all existing gas supply and transshipment agreements with Russia's Gazprom.
"An independent company will be engaged in gas transit and therefore, it will be necessary to revise well-known agreements (with Gazprom) since a new economic entity will come into being."
"Therefore, all agreements existing now will be revised," Azarov said.
Azarov also called into question the legality of those agreements under Ukrainian legislation, noting that previous agreements had required renegotiation of volumes each year.
“This agreement, that has interstate power and is placed above the inland laws, has never been effected. That’s why we think that the contracts concluded in 2009 contradict at least the part that concerns the annual gas supply volumes.”
Speaking on Friday, Gazprom CEO, Alexei Miller, said that he agrees with the possibility of restructuring Naftogaz, as well as the possibility of revising contracts, but only if it was to be merged with Gazprom.
However Vitaliy Lukyanenko, the spokesman for Ukrainian Premier re-iterated Ukraine's position that it is not considering a merger between Naftogaz and Gazprom.
"Ukraine has not raised the question of relations between Naftogaz and Gazprom. Naftogaz's restructuring is our internal affair. The premier did not address [Gazprom CEO Alexei] Miller today. He addressed the Russian government. What does Gazprom have to do with it?" he told Interfax-Ukraine.
Lukyanenko also added: "We should not pretend not to hear the main thing mentioned by the prime minister."
Today's announcement brings to a head the possibility that the gas disputes of 2006 and 2007 and supply disruptions to Europe, could again arise.
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