Naftogaz of Ukraine (, Naftogaz Ukrainy; literally "Petro-Gas of Ukraine") is the largest national oil and gas company of Ukraine. It is a state-owned company subordinated to the Government of Ukraine. The vertical-integrated company carries out a complete cycle of exploration operations and development of deposits, operating and exploratory drilling, extraction, transportation, and refinement of natural gas and crude oil, supply of natural and liquefied gas to consumers.
Ukraine's system of trunk natural gas pipelines and underground natural gas depots is operated by Ukrtransgaz, a subsidiary of Naftogaz. As of 2009, the company had 38,200 km of high pressure gas transit pipelines and more than 30 billion cubic meters of gas storage capacity. This major gas infrastructure located between Russia and the European Union has led the company to feature prominently in regional politics. Another subsidiary of Naftogaz, Gas of Ukraine, is responsible for domestic gas distribution to the local district heating companies.
Naftogaz is a major Ukrainian employer with 68,386 employees (as of 2018). The former PwC management consultant Andriy Kobolyev took over as CEO after the 2014 Ukrainian revolution tasked with reducing the country's dependence on Russian gas and reforming the company's business practices.
The group is the largest taxpayer in Ukraine. In 2018, revenues of the group consisted of ₴137 billion of taxes and dividends, which is about 15% of total revenues of the state budget.
History
1991–1998: Ukrgasprom
After the dissolution of the Soviet Union in 1991, oil and gas industry of Ukraine governed by Derzhnaftogasprom went through number of changes. The National Commission for State Regulation of Energy (NKRE) was giving out certification for gas trading to anyone without order ignoring the Derzhnaftogasprom. Guided by decisions of the First Vice-Prime Minister (on Fuel and Energy Complex) Pavlo Lazarenko, licenses were given to such companies like United Energy Systems of Ukraine (EESU), Intergas, Olgas, International Trading Energy Resources Association (ITERA), Ukrzakordonnaftogas, Ukrgasprom, Motor Sich, and Donetsk Oblast factories (later those formed the Industrial Union of Donbas).
In the early 1990s, there was privatization of gas distribution regional network known as "oblgaz" belonging to "Ukrgas". The process took place unnoticed and when Naftogas was constituted, not all privately owned distributors wanted to transfer their own stocks to the statutory fund of the National Joint Stock Company. Along with the gas distribution network in the same way there were privatized enterprises of petroleum products provision including filling station and fuel repositories that belonged to "Ukrnaftoprodukt". The whole petroleum products retail network had to be created by Naftogaz from zero.
The predecessor of Naftogas is "Ukrgasprom".
On 28 January 1995 after discussion with government the condition of agreements realization in provision for Ukraine gas imported from Russia and Turkmenistan, the head of "Ukrgasprom" Bohdan Kliuk was dismissed from his post on decision of the Cabinet of Ministers. Bohdan Kliuk who was appointed on 6 December 1994, on 19 December 1994 signed an agreement with "Gazprom" on distribution of gas for Ukraine under disadvantageous conditions. The issue with Kliuk provided Bakai with an argument to create Naftogas.
1998–2014
The company was founded in 1998 after previously being named Ukrgazprom. The main initiators who created the company were Ihor Didenko and Ihor Bakai (better known as Igor Bakai). The last one was the first deputy chairman of the Ukrainian State Committee on Oil and Gas. Before Naftogaz, both Bakai and Didenko worked for other gas trading companies "Republic Corporation" and "Intergas".
At the end of 1990s, Ukraine was consuming a record of 75 billion m3 per year which was the fourth indicator in the world and seemed strange to say the least considering that the country was not part of the top 20 in GDP volume. Eighteen billion m3 were mined inside Ukraine by Naftogas along with some joint enterprises such as "Poltavska Naftogasova Kompania", Plast, Ukrnaftogastekhnologia and others. All the gas that was mined by Naftogas and received through transit in obligatory order was being sold to population and state organizations. The remaining volume of natural gas, Ukraine was receiving from Russia as part of payment for transit or was buying from Turkmenistan. That gas was sold to industrial enterprises or was being re-exported.