The Cabinet of Ministers of Ukraine has specified the conditions for unbundling the gas transmission system (GTS) from NJSC Naftogaz Ukrainy using the ownership unbundling (OU) model and determined that after including the GTS operator into Naftogaz it must be unbundled no later than January 1, 2020, the term of expiration of the gas transit contract signed by Naftogaz and Russia's Gazprom.

This is outlined in the government resolution No. 485 dated June 5, 2019, which amends government resolution No. 496 dated July 1, 2016 approving the restructuring plan of Naftogaz in order to unbundle the GTS.

Thus, it is expected that the new structure managing the Ukrainian gas tranmission system will sign a new gas transit contract with Gazprom.

A government decree signed in 2016 provides for the creation of PJSC Mahistralni Gazoprovody Ukrainy (MGU), 100% of which is owned by the state, and the Ministry of Energy and Coal Industry has the right to corporate governance.

It was also planned that until the end of 2019, MGU would be part of Naftogaz and deal with organizational issues of preparation for the subsequent unbundling of the GTS, and after that it would receive the right to manage the assets of the GTS.

The government decree dated June 5, 2019 instructs the Ministry of Energy and Coal Industry, the Ministry of Economic Development and Trade, the National Commission for Energy, Housing and Utilities Services Regulation (NCER) and the Antimonopoly Committee of Ukraine to draw up a draft act on the temporary transfer of MGU corporate management powers to Naftogaz by June 20. This act should provide for the unconditional return of corporate governance powers from Naftogaz to the Ministry of Energy and Coal Industry no later than January 1, 2020.

The Cabinet of Ministers obliged Naftogaz and MGU to submit a draft act indicating MGU either by manager of the assets of JSC Ukrtransgaz (including pipeline infrastructure and underground storage facilities) or possessing this property on the basis of property rights by August 1, 2019.

With the participation of experts from the Energy Community Secretariat, the Energy and Coal Industry Ministry and the Economic Development and Trade Ministry are instructed to submit a draft act on the independence of the structure that will manage state corporate rights in MGU to the government.