CMU plans to approve the procedure for sale of privately produced natural gas on stock exchanges

At its meeting on January 12, the Cabinet of Ministers of Ukraine (CMU) plans to approve the procedure for organizing and conducting auctions for the sale of natural gas by local privately-run companies on Ukrainian energy commodities exchanges to meet the needs of the social sphere. According to the draft resolution, the Ministry of Energy must approve the staff of the committee oversee such trades on the Ukrainian energy commodities exchanges.

On January 5, 2022, the Ministry of Agrarian Policy and Food of Ukraine (MAPFU) approved a list of food producers to buy natural gas produced by Ukrainian private oil&gas companies at a fixed, reduced price.

On December 30, 2021, the Cabinet of Ministers (CMU) of Ukraine adopted Resolution №1435 which set "for the period of quarantine, but not longer than April 30, 2022" the maximum 24% surcharge to the cost of natural gas of Ukrainian production (excluding rent) when supplied to companies producing food products of significant social importance. The trade surcharge for the transmission of natural gas of Ukrainian production to meet the needs of the above-mentioned economic entities is set at a level of not more than 1%. The 20% of the volume of natural gas produced by the Ukrainian private companies is included into the list of products to be traded exclusively on energy commodity exchanges.

According to the Resolution №1435 of the CMU, natural gas will be sold on the Ukrainian Energy Exchange (UEEX). According to ExPro estimates, private producers of natural will be forced to sell about 80 mcm-90 mcm of natural gas on the UEEX every month.

One may remember the Association of Gas Producers of Ukraine to have criticized the CMU's initiatives, emphasizing that state regulation of the price of the locally produced natural gas is a completely non-market mechanism endangering the hault, or even lost, of the national gas production.