Energy Community Secretariat recommends Ukraine spin off Ukrtransgaz from Naftogaz

MOSCOW. Jan 26 (Interfax) - The Energy Community Secretariat has recommended that the Ukrainian government consider spinning Ukrtransgaz (UTG), the operator of the country's underground gas storage facilities, from state company Naftogaz Ukraine.

"Ukrtransgaz could be spun off from Naftogaz, and operate independently or incorporated in GTSOU [Gas Transmission System Operator of Ukraine] for operational decision making and optimization," Ukrainian media quoted the Secretariat as saying in a January report on reforming Ukraine's gas market.

With the increasing role of gas storage systems for the European Union market, enhancing corporate governance at UTG should be considered taking into account the experience of creating GTSOU, which took over UTG's role in managing the gas transport system in the process of Naftogaz's unbundling, the Secretariat said in a list of recommendations for medium- and long-term actions to establish an efficient gas market in Ukraine in line with EU regulations.

Other recommendations include elaborating the future gas infrastructure business model based on national natural gas production and transmission, as well as on transmission of decarbonized gases to EU markets.

The Secretariat also recommended coupling the national gas market with Moldova and/or neighboring EU member states; adopting a decarbonization strategy and a hydrogen strategy in particular; and establishing a regulatory and legislative framework for investments, exploration, production, storage, transmission and distribution of renewable/decarbonized gases.

"The hydrogen backbone east-west should be identified as one of the infrastructure priority projects," the report said.