2. Key milestones

Almost 10 years ago, the decision on launching the unbundling or separation of the gas transmission operator from production and supply was initiated. At the end of 2009, Ukraine joined the European Union's Third Energy Package, thus committing itself to undertake a number of reforms in the energy sector, in particular, to bring gas transportation activities outside the Naftogaz Group. This intention was recorded when our country signed the Association Agreement with the EU (2014) and passed the Law on the Natural Gas Market (2015). The next step was the CMU Resolution No. 496 of July 1, 2016, contained a restructuring plan for the Naftogaz Group, which included the separation of natural gas transportation and storage activities under the requirements of the EU's Third Energy Package.


To fulfill these obligations, a working group consisting of representatives of Naftogaz of Ukraine and Ukrtransgaz, with the support of the international consulting company PwC, developed a detailed plan of separation of the gas transportation function from the vertically integrated group of Naftogaz of Ukraine. This project has become one of the most important and at the same time, complex reforms of Ukraine's public sector. On the one hand, it is necessary to implement European norms and standards in the operation of the gas transmission system under certain limitations and contradictions in the regulation base of Ukraine and the lack of country's experience in projects of the same complicity. 


On the other hand, the process of gas transportation does not stop for a minute. Therefore, the reform process, including the separation of gas transportation and storage activities, the development of business processes, people transfer took place in a non-stop mode. In order not to disturb the technological processes, the scenario of step-by-step transfer of the gas transportation function to a separate company was selected, from concentration in a separate unit of Ukrtransgaz (TSO Branch) to a separate legal entity (GAS TSO LLC).



  1. December 2017 – Branch "TSO of Ukraine"  

After careful preparation in December 2017, a TSO Branch as a division of Ukrtransgaz JSC was formed. The Branch is focused on processes related to both the transportation of natural gas within Ukraine and its transit from Russia to the EU. Assets needed to support its operations were also transferred to the Branch.


  1. December 2018 – Branch "SSO of Ukraine" 

The next stage was the centralization of the underground gas storage facilities under one management. In December 2018, an SSO Branch was set up within Ukrtransgaz JSC. It has combined 11 underground gas storage facilities (UGS) across Ukraine. About 2,000 specialist specialists were transferred to it. GTS assets related exclusively to gas storage were identified, information systems and business processes were separated, and separate gas accounting was launched.


  1. February-June 2019 – Expansion and optimization of the Branch "TSO of Ukraine." 

However, merely separating the units, assets, and people on a paper is not enough. After all, the purpose of the project is to create an independent and efficient GTS Operator that will operate under European standards

Therefore, the first half of 2019 was devoted to the formation of a fundamentally new organizational structure of the company.

- Regional units or linear production departments of main gas pipelines (LVUMG) were consolidated from 32 to 20;

- Five separate branches were transformed into the four regional centers with the central management. In other words, the three steps control system "central office - branch - LVUMG" was transformed into two-level "central office - LVUMG";

- The organizational structure of the Operator has been significantly changed. In particular, the number of management positions has been reduced from seven to three;

- Operator's regulatory base was formed. It includes more than 5 thousand documents: regulations, procedures, regulations on structural units, job descriptions, and more.

June 2019 became a "trial period" in the work of the Operator. All employees involved and supporting the gas transportation process were transferred to the TSO branch. Thus, the prototype of the future independent GTS Operator of Ukraine was created.


  1. Preparation for the legal separation of the Gas TSO LLC. Development of business processes.

On July 1, 2019, a full-fledged operation of Gas TSO LLC, a legal entity that is 100% owned by Ukrtransgaz JSC, was set up at the beginning of this year to further separate from the Naftogaz Group. In this way, a separate company was formed, within which the future independent Operator should be finally formed. 

By the end of 2019, this company maintains the main gas pipelines. While a number of functions - commercial activity, dispatching, procurement remain in Branch until December 31, 2019 (subject to licensing and current contract with Gazprom).

During this time, the basis for the further work of an independent Operator must be finally formed. In particular, GTS of Ukraine LLC must obtain all necessary licenses and receive preliminary certification from the National Energy Regulator, with further confirmation by the Energy Community Secretariat, as well as obtain a tariff for gas transportation services.


  1. Legal separation. The Independent GTS Operator of Ukraine started operating.

The time between the ends of 2019 beginning of 2020 will be the most crucial moment in the work of the Operator. From January 1, 2020, immediately after the end of the current gas transit contract between Naftogaz of Ukraine and Gazprom, GAS TSO LL of Ukraine shall withdraw from the Naftogaz Group and receive the assets of the Ukrainian GTS in concession. And, accordingly, to start fully autonomous work on the operation of domestic GTS. It should be emphasized that the Ukrainian GTS remain state-owned and continue to work for the benefit of Ukraine.