Page 4 - FSUOGM Week 17 2021

FSUOGM COMMENTARY FSUOGM

Unbundled: the Gas Transmission

System Operator of Ukraine

By unbundling production and transport, the country has attracted hundreds of traders that

compete on a vibrant market that has eliminated corrupt scams and brought prices down

UKRAINE UKRAINE gas business reforms have been a of the production housed in Naftogaz as well
huge success. By unbundling the production and as the creation of the pipeline operator. At the
Ukrainian energy transport segments the country has attracted end of 2019 Gas Transmission System Operator
reform started in hundreds of traders that compete on a vibrant of Ukraine (GTSO), a fully independent state-
2015 and has led to market that has largely eliminated the old cor- owned company under the Ministry of Finance,
the unbundling of its rupt scams and brought prices down for the was created to manage access to the pipelines.
gas business, creating consumer. At its birth the GTSO, by dint of its existence,
GTSOU, which is an The reform has been based on the deceptively becomes the basis of a vibrant and competitive
independent company simple principle of separating the production of market for gas.
that owns and runs gas from its transportation and making the pipe- “The new gas law brings Ukraine into line
the country's pipeline line network accessible to anyone that has gas to with the EU’s third energy packet. It is an unbun-
system. transport at the same price. dling that mirrors the reforms in the EU,” Sergiy
The old system was based on the principles of Makogon, CEO of GTSO, told bne IntelliNews
“who you know” and “how much you are will- in an exclusive interview. “The GTSO is an
ing to pay” that led to chronic corruption and a independent company and must supply equal
distorted market as the oligarchs knew everyone access to the pipeline network to everyone on
and were willing to pay a lot. the market.”
The Ukrainian gas market reform came And it is massive. The Druzba pipeline sys-
to fruition in 2015 with an unbundling that tem that crosses the country was built in Soviet
brought Ukraine’s gas market into line with the times and even at the height of the Cold War, the
EU’s third energy package. The main feature was Soviet Union continued to be the main supplier
an unbundling of the system and a separation of natural gas to Western Europe, supplying up

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