Issues arising in the relationship between Naftogaz Ukraine and OAO Gazprom will be resolved. Reforming Ukraine's oil and gas sector to European standards will allow the companies to avoid problems in future, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

According to Eduard Stavitskiy, Ukraine's Minister of Energy and the Coal Industry, Naftogaz Ukraine will pay in full for the Russian gas which has been supplied. 

The government implements a number of programs aimed to reduce consumption of the Russian gas, because of the high cost and in order to save the foreign exchange reserves of the state. This work was initiated by President Viktor Yanukovych in order to reduce the negative impact on the national economy of the agreements signed with OAO Gazprom in January 2009 which caused a significant increase in the price for gas. 

A diversification of gas supplies to the Ukrainian market is underway, This is largely due to the fact that the gas prices of Russian OAO Gazprom for Ukraine are significantly higher than for most European countries, although Ukraine is one of the largest consumers of Russian gas, one of Russia's closest neighbors, and buys large amounts of gas in spring and summer. This has led to the situation where it is more advantageous for Ukraine to buy gas in Europe than in Russia.

The Cabinet of Ministers is reforming "Naftogaz of Ukraine" and liberalizing the oil and gas industry to fulfill the Ukraine’s commitments in connection with the accession to the European Energy Community Treaty in autumn 2010.
Kyiv has agreed with Brussels the need to adapt the Ukrainian legislation to the EU codes and standards in the field of energy. In accordance with the so-called Third Energy Package adopted by the EU in 2009, "Naftogaz" has to be divided into a mining and a transport companies. Also, a separate company will be engaged in sale of oil and gas. The deadline for implementation of the Third Package is January 1, 2015.

Experts point out that the progress of the "Naftogaz" reform will drive the prospects of Ukraine's European integration, which is a priority for the Cabinet and the president. 

The government believes that the liberalization of the oil and gas industry will allow it to develop in line with market trends, will help attract foreign investment for its modernization and expansion of its infrastructure. This will strengthen the energy security of the state and Ukraine's position on the international arena, provide additional revenues to the state budget and create jobs.

The adoption of the gas market liberalization legislation will accelerate modernization of the gas transportation system.


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