Maintaining a high level of transparency and accountability is one of the priorities of the Naftogaz group. The company realizes that its activities significantly influence the energy security of Ukraine and its sustainable development. Timely informing all stakeholders as to operational and financial performance and socially significant aspects of its activity is one of the company's responsibilities.
Naftogaz aims to create a robust and transparent disclosure system in accordance with the principles of corporate governance for state-owned enterprises defined by the Organization for Economic Cooperation and Development (OECD). According to the OECD standards, Naftogaz group as a state-owned enterprise operates in the public interest. Therefore, ensuring public access to key performance data of the company is the basis for accountability and prevention of possible political interference into the company's activity.
Naftogaz is implementing the OECD best practices in its transparency and information disclosure policy.
Transparency and information disclosure policy
In 2015, the company developed a policy on transparency and information disclosure, which was adopted in 2016.
Materiality criteria for information disclosure
The company discloses information in accordance with the disclosure requirements set by the laws of Ukraine, as well as the OECD principles for state-owned enterprises.
Information that meets the following criteria shall be the subject of public disclosure:
1. The information is mandatory for disclosure in accordance with the laws of Ukraine.
In particular, this includes financial and statistical reporting; information on over threshold procurement of goods, works and services; data which have to be disclosed under the law on access to public information, etc., or
2. The information disclosed by Naftogaz on a voluntary basis:
• Information about actions and events that have a material effect on operating income or assets of the group (may cause a decrease or increase of operating income or of the assets for more than 10% from the corresponding figure of the group according to the latest published consolidated annual accounts);
• information on decisions or events which, in the opinion of the management, have or may have a material impact on the implementation of any of the key areas of the strategy of the holding company or any of the companies of the group;
• regular statistical information about the company's activity, companies of the group and oil and gas market of Ukraine (in aggregate or expanded form, upon decision of the company's management), including the volume of gas stored in underground storage facilities, transportation of gas through Ukraine's territory, the volume of gas production, volume and aggregated cost of imported gas, gas sales volumes and dynamics of payments for gas by consumers, etc.;
• information about transactions with related parties, i.e. companies that are not part of Naftogaz, but the owners/co-owners of which are members of the executive board of Naftogaz or are board members of its subsidiaries, except where such transactions are procured via an open tender in the ProZorro electronic public procurement system;
•information about changes in the composition of the executive board of Naftogaz or enterprises of the group, value of assets for more than 5% of the assets of the last published annual consolidated accounts;
• annual declaration of property status and income of Naftogaz` chief executive officer;
• Information that is not material to the financial performance of the company or implementation of its strategy, but, in the opininon of the management, is or can be of significant public relevance.
The following information is not subject to public disclosure:
1. The information identified as confidential in agreements with contractors. The company discloses information to statistics and controlling bodies in accordance with applicable law;
2. Other information that is not required for publication in accordance with applicable law, and the disclosure of which, in the opinion of the management, would prejudice the interests of the company in negotiations or otherwise undermine its business activities.
Information disclosure channels and tools
For information disclosure, Naftogaz uses its own resources, namely, corporate websites www.naftogaz.com and www.naftogaz-europe.com, as well as its official pages in social networks Facebook and Twitter. Official notices on behalf of the company are also sent by the press service from the address firstname.lastname@example.org.
Official information is also included in annual reports, financial statements issued according to IFRS standards, and other periodic reports and materials which are published on the corporate website of Naftogaz and distributed by Naftogaz to the media and other stakeholders.
The group cautions against using information obtained from other sources without making an inquiry to the company. Naftogaz is subject to numerous ongoing and ad-hoc inspections by a number of agencies. To meet their specific requests, the group may prepare reports presenting information in line with assumptions and requirements set by such agencies. The resulting reports may not be complete and representative, unlike the officially released audited financial statements prepared in line with the IFRS. The management is ready to provide comments on data related to Naftogaz in order to avoid possible distortion of facts and ensure an objective interpretation in the appropriate context.
Cooperation with the Professional Community and Industry Transparency Platforms
The key channel for external communications for Naftogaz is media. The group also closely cooperates with think-tanks and NGOs.
Naftogaz is open to the participation in the transparency leading platforms related to the activities of the company or its subsidiaries. After the adoption of a new regulatory framework in Ukraine's gas market, Naftogaz set out to conduct outreach activities to explain the new rules and changes. These measures include holding press conferences and meetings of the company's management with its target audiences: journalists and editors of news agencies and media; expert community and industry associations; senior officials and middle managers, decision-makers; representatives of the diplomatic corps and international organizations; interested domestic and foreign investors.
Public outreach in 2015:
Press releases — 220+
Media interviews — 20+
Press conferences and briefings — 18
During 2015, Naftogaz has participated in a number of relevant events, including the Munich Security Conference; Meeting of the NATO-Ukraine Commission in Brussels; International conference on assistance to Ukraine in Kyiv; Ukrainian-American Investment Conference, USA; Ukrainian-German Economic Forum in Berlin, and others.
The company is working to increase transparency in the energy sector. In order to further implement the transparency mechanisms, in 2015, Ukrtransgaz, a 100% Naftogaz subsidiary, opened access to observers of the European Commission to the gas transmission system (GTS) facilities, including gas metering stations to monitor the transportation of natural gas through Ukraine's territory. In addition to providing physical access for the monitoring mission to the Ukrainian GTS, Ukrtransgaz publishes data on Russian gas flows via Ukraine (applications for transit, actual inflows from Russia and actual outflows to the EU) on a daily basis at the transparency section of its website http://utg.ua/live/. To ensure maximum transparency and outreach to interested stakeholders, storage and gas flows data are also published at leading EU transparency platforms. Since 2014, Ukrtransgaz provides information on residual gas volumes in underground storage facilities to AGSI+, a European transparency platform operated by Gas Infrastructure Europe (GIE) https://transparency.gie.eu. Gas flows data is automatically provided to the European Association of GTS operators ENTSOG https://transparency.entsog.eu.
Naftogaz is open to participation in other leading transparency platforms related to the activities of the group or its subsidiaries.
At the time of publication of this report, the company is involved in the development and actively supports the promotion of the draft law on transparency in the extractive industries.