Inna Shcherbyna

Deputy Chairman of the Exchange Committee of the Ukrainian Energy Exchange

Enactment of the Law removes final obstacles to full implementation of the EU Regulation №312, which introduces a network code for gas balancing in the GTS and compliance with the requirements of the Law "On the Natural Gas Market". This means that from now on we have the opportunity to create our own gas market in Ukraine - a gas hub with price benchmarks to become another gas benchmark in Europe. All powerful gas markets started with the implementation of the Regulation №312 - with the obligation of participants to balance their portfolios, and the GTS operator had to balance the system by buying and selling short-term standardized products on the short-term exchange market. The daily balancing regime shall promote the development of the short-term exchange market it requires in the early stages to further become transformed into a well-functioning fast-moving and powerful wholesale market.

ACER says that poor development of the short-term wholesale markets distorts full and effective retail competition, while not full (selective) implementation of the Regulation №312 delays the development of the natural gas market and prevents from obtaining significant benefits provided by full implementation of the Regulation. GTS operators shall trade in natural gas for the purpose of final balancing on the same exchange trading platforms as customers of transportation services by using short-term standardized products in order to increase competition and liquidity of the short-term wholesale gas market.

The Law will provide the opportunity to solve market problems related to the payment for daily imbalance. The prices of the liquid exchange, where the GTS operator also participates to trade short-term standardized products for balancing the GTS, should become the basis for calculating the imbalance fee (margin prices). It is important to ensure a mechanism for marginal pricing based on real market prices for short-term products, as long-term contracts and the purchase of balancing services are not able to provide this.

The Law applies exclusively to the purchase of gas by customers of transportation services (licensed gas suppliers), GTS operators and GDN operators (to compensate for technological losses) solely as short-term standardized products (the Law annotates that the exchange must comply with the GTS Code) confirmed by the Secretariat of the Energy Community. The Law does not exclude the purchase of natural gas by state enterprises from the Law of Ukraine "On Public Procurement", it can only be state licensed suppliers and solely for balancing purposes (procurement of short-term standardized products) in accordance with the GTS Code and certified exchanges from July 1, 2021.

GTS Operator of Ukraine makes every effort to ensure the full implementation of the European reforms and now it has the opportunity to ensure this in full. The development of the short-term gas market will not only facilitate cross-border trade, but also provide market prices to improve Ukraine's competitive and effective gas market.