27 May 2022 16:32

Naftogaz to become national petroleum product market operator

MOSCOW. May 27 (Interfax) - Ukraine's Naftogaz has been tasked with becoming the so-called national operator in the petroleum products market in order to ensure fair market prices, Naftogaz CEO Yuriy Vitrenko said.

"The idea is not that the state wants to monopolize this market. But now a powerful state player should appear in the market, one in which there would be complete confidence both on the part of the state and the people, with the understanding that prices at these filling stations are fair and honest," he told reporters in Davos.

There is a certain mistrust in large private filling stations networks, he said.

"When there is a state player with a significant market share - 15-20-30%, that is, not 100%, but not 1% either, then there is more confidence that consumers have the opportunity to buy at a fair, competitive price. If the network has 30% of the market, this already provides a real alternative for people. In turn, this will force private operators not to raise prices either," Vitrenko said.

He said that the emergence of a state player makes it possible to make it a price leader and abandon state price regulation.

"Naftogaz should be the operator of the national network so that the question of high prices does not arise. This president set this task. We can also be an effective tool for the state to cooperate with the world's largest companies in terms of resources," Vitrenko said.

Vitrenko said Naftogaz had not yet gained control over the Glusco filling stations network. "There are some nuances, but I hope that the state will show a certain will and we will have control over the gas station network," he said.

But he said the availability of gas stations in the current conditions does not mean the availability of oil products.

Vitrenko said it is not hard to find gasoline and diesel abroad. "For example, here in Davos, I held talks with leading companies, and we have the opportunity right now to bring a very large amount of fuel to European ports to cover all the needs of the Ukrainian market. For large companies, the scale of the Ukrainian market is relatively small. They are saying there are no questions, we can cover all your needs tomorrow," he said.

The problem is that these large companies can supply fuel to large ports - Amsterdam, Rotterdam, Antwerp or Mediterranean ports, while fuel is needed at the border of Ukraine or in the ports of Poland and Romania with logistics help from these ports to Ukraine.

"So far, there is no logistics in the required volumes. It is necessary to negotiate with countries such as Poland, Romania, Hungary, Slovakia, so that they expand logistics capabilities in a non-standard way or even sometimes give priority to the logistics of petroleum products in Ukraine. This is not only a matter of business or economics, but also politics," Vitrenko said.

He said that in his opinion the role of Naftogaz is to solve commercial issues that are more difficult for private businesses.

Asked about the national operator's network, Vitrenko said this concerned both gas stations that Naftogaz fully controls, and gas stations of Ukrnafta, in which Naftogaz has a majority share.

Prime Minister Denys Shmyhal on May 13 announced a decision of the cabinet of ministers to transfer Glusco 172 filling stations to the management Naftogaz. He said there had been a court ruling to transfer the relevant property to the state.

Apart from that, Naftogaz's wholly owned subsidiary Ukrgazvydobuvannia owns a network of 21 U.GO filling stations in the Kharkiv region while Ukrnafta, where Naftogaz owns 50% plus one share, has 537 filling stations.