Daily balancing of the gas market is to be introduced in Ukraine, with the financial security burden on network users alleviated

On 27 December 2017, following the resumption of a quorum required for its decision-making, the National Energy and Utilities Regulatory Commission (the "Regulator"), adopted the amendments to the Gas Transmission System Code (the "GTS Code") to implement the requirements of the Law of Ukraine "On the Gas Market of Ukraine" and the Third Energy Package, in particular, Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of Transmission Networks.

The amendments to the GTS Code of Ukraine aim to liberalise the market and promote a competitive short-term wholesale gas market that is more resilient and flexible, and will allow network users to more efficiently manage their gas supplies on a non-discriminatory basis.

A trial period until 1 August 2018 has been established in which to test the informational platform and monitor the market's performance. Based on the results of the trial period, the processes of the market operation can be further streamlined and improved, and the role and functions of the TSO can be adjusted.

Key changes relate to the following:

Gas nomination procedure will be streamlined and based on daily nominations

Monthly nominations will be cancelled, and only daily nominations shall now apply. All nominations will be submitted through the informational platform. The time for the submission of nominations will be extended, and customers will be able to submit nominations not earlier than 60 days prior to a relevant gas day for which gas is transferred (currently, the term is one month).

Unlike the previous system, the transmission system operator cannot reject nominations or re-nominations for deviations of the gas volumes planned for input and offtake by customers.

Financial security will be eased

Previously, customers were to provide financial security ensuring their payments for balancing services of the TSO under the conditions which were rather onerous for customers, especially in the context of monthly nominations.

Following the amendments, customers will be able to select the form and amount of financial security (based on the information available on the informational platform) which will correspond to the outstanding amount of the negative imbalances they have created.

Customers can opt for one of the following forms or a combination of them:

- the bank guarantee; and/or
- monetary funds based on a gas transport agreement.

This will reduce the financial burden on the customers and incentivise them to avoid imbalances.

Introduction of a registry of customers of gas suppliers

A registry of customers will be introduced in Ukraine. This will facilitate nomination submissions by suppliers and the process of switching between gas suppliers for customers. The registry will classify customers into two categories, depending on whether or not customers own distant transfer data systems on their nodes.

Informational and trading platform to be established for market exchanges

The informational platform will be introduced and administered by the TSO to facilitate communication amongst the market players and data transfer via the Internet, and to enable operation of the market under conditions of daily balancing.

Trading platforms will also be created where participants of the gas market can easily exchange their gas volumes and settle their imbalances. The administrator of the trading platform will cooperate with the TSO to ensure the effectiveness and transparency of the exchange.

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