Ukrainian state gas firm Naftogaz will allow foreign investors to create fully owned retail subsidiaries and to take stakes of up to 49 percent in the Naftogaz group, its chief executive Andriy Kobolyev told a German newspaper on Monday.

"There are interested parties lining up, but I cannot name them yet," he said in an interview with Germany's business daily Handelsblatt.

Naftogaz produces and procures gas on a pivotal transit route between Russia and Europe and seeks to end its reliance on Russian on roughly half of Ukraine's gas needs through better EU connections.

The spat over Russian gas supplies and pricing for Ukraine has been at the heart of the broader standoff between the two former Soviet states that has led to military hostilities in east Ukraine.

Ukraine would comply by the year-end with the EU's third energy package, Kobolyev said.

This requires that energy companies are split between production, transport and retail activities to encourage competition and bring prices down for consumers.

"That way, we will divide Naftogaz in a transparent way and at fair prices," he said. (Reporting by Vera Eckert, editing by Louise Heavens)