OREANDA-NEWS. January 16, 2008. Naftogas of Ukraine NJSC initiates termination of contracts for gas supply signed between UkrGas-Energo and gas-transporting companies,UFC-Capital reports. The government headed by Yulia Timoshenko continues its fight with UkrGas-Energo. On January 8, the National Electricity Regulatory Committee (NERC) announced that it is going to reduce the volumes of natural gas supply for the company from 32 bn to 5.04 bn m3 per year by introducing changes into the license of the company. The next blow to the gas trader was delivered by the NJSC. The representatives of Naftogas during their meeting held on January 11, 2007, called upon the managers of Ukrtransgas, gor- and oblgases to collect money for gas transportation services directly from consumers-counterparties of UkrGas-Energo (presently, the money for these services is collected by the fuel supplier). For 11 months of 2007, UkrGas-Energo transferred to the gas-transporting companies in excess of UAH 3 bn as payment for their transportation services, including more than UAH 2 bn – to Ukrtransgas, a subsidiary of Naftogas of Ukraine. Taking into account the “affection” of the new Cabinet of Ministers, and personally of Yulia Timoshenko, the prime-minister, to RosUkrEnergo and its subsidiary – UkrGas-Energo, these innovations are obviously not the last ones. Yuriy Prodan, minister for fuel and energy, says it is UkrGas-Energo that is operating in the gas market instead of Naftogas, for which the former government established “specific additional conditions to derive additional profits”. The profit margin of UkrGas-Energo is created for account of Naftogas. In this situation, the financials of Naftogas have deteriorated significantly, as it does not earn in the domestic market and is even unable to get its own profit share from UkrGas-Energo activities.”

UkrGas-Energo believes that these innovations by Naftogas are illegal and aimed at gas market destabilization and claims that the company has not yet obtained any notifications from the gas-transporting companies about relevant contracts termination. “In early 2007, we signed 5-year contracts with all companies that transport and distribute gas across the whole Ukraine. As of today they are being fulfilled in full by the parties and we without any interruptions supply gas to the consumers’ gates, as it is provided for by the license terms and conditions issued by the NERC. There are no legal or financial reasons to revise the base contracts,” Vitaliy Kisel, press-service head of the company, said.