A party to the contract is Naftogaz as vertically integrated company, which has commissioned its subsidiary Ukrtransgaz (TSO) with technical implementation of the contract. The contract does not meet requirements of Ukrainian and EU law – the TSO must be unbundled.

AFTER 1 JANUARY 2020

No changes on the Russian side: Gazprom remains both the monopoly pipeline exporter of gas from Russia and the Russian TSO.

In Ukraine, unbundling will take place – a process of legal and operational separation of gas transmission function from Naftogaz. TSO of Ukraine LLC executes technical operation of the system and has to complete certification, to become a subsidiary of the state-owned company Mahistralni Gazoprovody Ukrainy (MGU) from January 1.

New deal with Gazprom should be fixed in two agreements:

Interconnection Agreement

Based on the Commission Regulation (EU) 2015/703 establishing a network code on interoperability and data exchange rules.

The agreement deals with firm and technical capacity, measurement principles for gas quantities and quality, rules for flow control, rules for the allocation of gas quantities of different shippers.

TSOs of Ukraine and Russia should become the parties to the agreement. Such agreements have already been signed with the TSOs of Poland, Slovakia, Hungary and Romania on most of interconnection points.

Gas Transmission Contract

Based on the Model Contract for Natural Gas Transmission approved by the regulator (NEURC).

The contract envisages the provision of gas transmission services by the TSO to a shipper that purchases capacity at different entry/exit points. Volumes and conditions of gas transmission are subject of the contract, while tariffs are set by the NEURC.

Such contracts are signed with all traders and suppliers using the TSO services (according to NEURC, 373 customers of transmission services operated in the Ukrainian gas market in 2018).

In order to receive transmission services, after concluding the contract, Gazprom must get an EIC code* and a shipper code** in the TSO electronic database, receive access to its Information Platform, register a periodic customs declaration and a shipper pair, make payment for the capacity and submit a nomination.

* Energy Identification Code of natural gas market player and/or commercial metering point, defined under the rules of the European Network of Transmission System Operators for Gas (ENTSOG), for the purposes of unification and identification, including for the purposes of participation in international gas markets and to ensure simplification of supplier switching and data exchange

** alphanumeric identifier of the customer of transmission services, used in messages during matching of nominations; also identifies gas owner at cross-border interconnections

Prepared by DiXi Group think tank based on data from media, Ukrtransgaz, NEURC and Director of TSO of Ukraine LLC Sergiy Makogon.