Ukrainian debt weakens gas company's investment plan

Naftogaz Ukrainy is supporting lawmakers' efforts to regulate the company's debt problem, it said June 18, as problems with non-payments threaten its investment plans in the upstream, transport and storage.

Parliament has approved at first reading a bill to regulate gas market debt, the state-owned company said. "We are grateful to the people's deputies and members of the energy committee who have initiated the drafting of the law and moved the process on. Naftogaz is now standing by and is ready to help develop the draft law for its second reading," it said.

Debts owed to Naftogaz are already above 120bn hryvnias ($4.4bn) and this matter needs to be resolved urgently, it said.

It said that major consumers had become insolvent. If this problem is not addressed, it will gradually weaken the flow of investments, particularly in the upstream, and negatively impact the activity of subcontractors in the transport and storage sectors, it said.

"In the context of Nord Stream 2, all this points to a heightened threat to the country's security of supply," according to the company. The draft law is a framework that will, when adopted, become the starting point for auditing debts, analysing their cause and for adopting additional legislation to manage the problem.

Nord Stream 2 will, when operating at maximum, allow Gazprom to cut transit across Ukraine by 55bn m³/yr, meaning lower revenues for the government. Ukraine has not bought gas directly from Gazprom for some years, importing instead gas from the west.