Government agrees creation of two companies on basis of Ukrtransgaz, says minister

The Cabinet of Ministers of Ukraine has agreed to a decision on the creation of two public joint-stock companies Ukrainian GTS and Ukrainian Gas Storage Facilities on the basis of Ukrtransgaz, Energy and Coal Industry Minister Yuriy Prodan has said.

"A cabinet resolution has been passed… two joint-stock companies with 100% state ownership will be created. A company that will work as an independent operator under European rules and a company that will have underground storage facilities in ownership," he told reporters in Kyiv on Wednesday.

The minister said that some amendments to Ukrainian law have to be made to fulfill the relevant decision. The government will draw them up and submit them to the parliament.

"There are certain legal acts which are to be passed and that will push up the realization of the third energy package on the strengthening of independence of the gas transport system," Prodan added.

He also said that the ministry plans to draw up amendment to the laws within one month and they will affect not only the reorganization of national joint-stock company Naftogaz Ukrainy, but the functioning of the gas market in line with the European rules.

"Within one month we are to draw up the relevant draft law, which will have wider importance," he added.

Earlier Ukrainian Prime Minister Arseniy Yatseniuk said that Ukraine would create public joint-stock companies Ukrainian GTS and Ukrainian Gas Storage Facilities on the basis of Ukrtransgaz.

He said that Naftogaz Ukrainy would only sell natural gas.

Ukrtransgaz, whose 100% stake is held by Naftogaz Ukrainy, operates a system of trunk gas pipelines and 12 underground gas depots. The Ukrainian gas pipeline system's handling capacity is 288 billion cubic meters at the entrance and 178.5 billion cubic meters at the exit, including 142.5 billion cubic meters channeled to Europe and 3.5 billion cubic meters to Moldova.