Naftogaz

Diagram illustrating Naftogaz's production cycle

Naftogaz is Ukraine's state-owned oil and gas company based in Kyiv. Naftogaz's primary area of business is gas trading and wholesale distribution. Naftogaz and its subsidiaries cover the whole spectrum of oil and gas business from upstream activities such as exploration, drilling, and extraction to retail distribution. More specifically, the company engages in field exploration and development, production and exploration drilling, storage of oil and gas, and processing and distribution of various oil products, natural gas, and liquefied gas to consumers.

The Naftogaz group comprises the upstream gas company Ukrgasvydobyvannya, oil and gas producer Ukrnafta, gas transit system operator Ukrtransgaz, oil refinery group Ukrtatnafta, oil transportation company Ukrtransnafta, and a number of companies dedicated to research and development, overseas exploration, and other activities.

Naftogaz’s operations are managed by the following business units:

• Exploration and Production: This business unit (BU) covers prospecting, exploration, and development of oil and gas fields and production of hydrocarbons. According to Naftogaz, it accounts for more than 70% of Ukraine's gas production.
• Natural Gas Storage: This BU is in charge of Ukraine’s underground gas storage facilities.
• Oil Transit and Transportation: This BU provides oil transportation to Ukrainian oil refineries and transit to the countries of Eastern and Central Europe, focusing on oil refining as well as oil and oil product trading.
• Trading: Naftogaz's Trading BU was established in December 2020 through the separation of the Commerce Business Division into two distinct units, Trading and Retail.
• Retail Business: The Retail is one of Naftogaz's newest BUs, which specializes in selling natural gas to households as well as small and medium-sized businesses.
• Heat Energy: The Heat Energy BU is engaged in the production and distribution of electricity in Novoyavorivska and Novorozdilska combined heat and power (CHP; cogneration) plants, as well as in the production, transportation, and supply of hot water and heat energy in Novoyavorivsk and Novyi Rozdil in the Lviv region.
• New Energy: New Energy is a BU that focuses on the creation of new business directions aimed at evolving Naftogaz beyond an oil-extracting company to a national energy service provider.

In July 2022, Naftogaz announced at a shareholder meeting that the company’s proposal for a two-year suspension of debt service on three Eurobonds had failed, and as a consequence, the company was forced to default. This was due to Naftogaz not receiving consent from the Cabinet of Ministers of Ukraine to pay principal and interest on its 2022 bonds and interest on the 2024 bonds.

In 2022, Naftogaz launched a new arbitration procedure against Gazprom because of its failure to pay gas transit fees. Naftogaz filed this request for arbitration with the International Court of Arbitration of the International Chamber of Commerce in Paris.