Naftogaz Ukrainy Separates Upstream from Downstream
State Naftogaz Ukrainy has dissolved its integrated gas business and created two divisions in its place: upstream and commercial, it said May 9. It said this was due to "new market conditions" and the need to focus on gas sales to end consumers. The company's public service obligations (PSO) will be eliminated this summer, opening up the sector to competition.
The commercial division will develop the retail gas segment, trading activities and building effective natural gas sales channels. The upstream division will manage investments upstream and expand the proven reserves in the Naftogaz portfolio.
The former head of the integrated gas division was Andriy Favorov, who has now left the company. The upstream head and head of major asset Ukgrazvydobuvannya have been named but not the commercial head.
“Naftogaz is committed to becoming a strong company with sound corporate governance and to carrying out activities according to international standards. The separation of hydrocarbon production and sales activities is among the best practices of international oil and gas companies. This is a proven model that has demonstrated its effectiveness worldwide. I am sure it will prove its effectiveness at Naftogaz. There will be two teams and two leaders within the group. Each will focus on their domain. By doing so, we want to increase efficiency,” said Naftogaz' chief operating officer, Otto Waterlander. He was appointed to that role the day before, while continuing as the company's chief transformation officer.
The upstream division is headed by Oleksandr Romanyuk, who had previously held the position of first deputy CEO at Ukrgasvydobuvannya. The former head of the legal department, Olena Kobets was appointed CEO of the company's chief upstream arm, Ukrgasvydobuvannya.
Kobets will be responsible for shareholder relations and the company’s compliance with legal and fiscal requirements, compliance with the standards and procedures of the group, and authorisation of contracts, as well as ensuring the functioning of corporate governance.
“According to the logic of the transformation, key strategic decisions on business development will be made at the level of divisions, and operational work will be concentrated at the level of enterprises with the relevant expertise. Oleksandr Romanyuk has already made a great contribution to the increase in production, technical upgrade, restructuring of processes, and fighting against corrupt practices in production. He has expertise in gas production and will be able to effectively push further reforms. Olena Kobets participated in the transformation of corporate functions and the development and implementation of strategic projects. I am sure that her expertise will help establish effective interaction between the directors of divisions within the company,” said Naftogaz CEO Andriy Kobolyev, whose contract is set to expire in March 2024.