EXTRACT FROM THE UKRAINIAN GAS MARKET INVESTIGATION
PICK Energy Consulting Ltd. www.pickenergy.com.ua UNIQUE POTENTIAL OF UKRAINE FOR ESTABLISHMENT OF A COMPETITIVE MARKET
• Energy intensive industry • Possible extension of the gas marketing for household end-users • Underdevelopment of the domestic gas reserves • High-capacity underground gas storages • Strategically advantageous location of the state at the intersection of trade and transporting routes SPECIFIC FEATURES OF THE UKRAINIAN GAS INDUSTRY
• Priority principle
• Multi-level state regulation
• A state company is built-in to the interaction mechanisms
• Lack of integrity and integratedness LARGEST NATURAL GAS PRODUCERS IN UKRAINE
N/N COMPANY Forecasted yearly volume (mmcm), 2013 1 PUBLIC JOINT STOCK COMPANY 15,300 “UKRGASPRODUCTION) 2 STATE JOINT STOCK COMPANY 1,649 “CHORNOMORNAFTOGAZ” 3 OPEN JOINT STOCK COMPANY “UKRNAFTA” 2,500
4 PRIVATE COMPANIES (Regal Petroleum, Smart 2,600 Energy, Naftogazproduction (DTEK), Poltava Oil & Gas Company, Kulczyk Oil Ventures, ENI, Golden Derrik, Anglo-Ukra Energy, Emfesz, East One, Devon, Sodruzhestvo, others) TOTAL 22,049 MECHANISMS OF GETTING PERMISSIONS FOR NATURAL GAS PRODUCTION BY THE STATE COMPANIES WITHOUT AN AUCTION
Special permissions: Naftogaz of Ukraine Joint State Agency of Ukrgasproduction Operation Geology Ukrnafta Agreement and Mines Chornomornaftogaz with a private Of Ukraine Nadra Ukrainy investor
MENRU SSISIS Councils of People’s Deputies Sale of natural gas with low regulated price MECHANISMS OF GETTING PERMISSION FOR NATURAL GAS PRODUCTION BY PRIVATE COMPANIES AFTER AUCTIONS
Special permissions: Joint State Agency of Private Operation Geology producing Agreement with and Mines companies other Of Ukraine investor
MENRU SSISIS Councils of People’s Natural Gas Sale Deputies with non-regulated prices (about 2 billion cu.m/year) PRODUCTION SHARING AGREEMENT IN UKRAINE
1. PSA for Yuzivska area (Shell, Nadra Ukrainy, SPK-Geoservice, CMU); 2. PSA for Oleska area (Chevron, Nadra Ukrainy, SPK-Geoservice, CMU);
Planned:
3. PSA for Subbotina, Kavkazka, Mayachna, Abikha (ENI, EDF, Nadra Ukrainy, Vody Ukrainy); 4. PSA for Skifska area (ExxonMobil, Shell, OMV, CMU, Nadra Ukrainy); 5. PSA for Foroza, Slobozhanska (not tendered yet). INTERACTION FOR CONCLUSION OF PRODUCTION SHARING AGREEMENTS
Cabinet of Ministers of Ukraine
Company – Interministerial winner of a bidding Commission round
Proposal of a potential investor MECU MESU A state company – MENRU SAGMU partner, appointed MERTU MJU SSISISU by CMU MFU Partner of a People’s Deputies state company, appointed by SAGMU Structure of natural gas import to Ukraine
Importing Company Its Counterparty (seller) Forecasted Quantity for 2013 (1000 cu.m/year) Naftogaz of Ukraine Gazprom 18,000,000 Naftogaz of Ukraine RWEST 1,300,000 OstChem Gazprom 8,000,000 VETEK, DTEK n/a 2,000,000
TOTAL 29,300,000 INTERACTION OF PARTICIPANTS FOR NATURAL GAS IMPORT TO UKRAINE
List of Annual Monthly Agreement Gas gas market Balance Balance with Trading participants of Gas of Gas gas supplier License Input Input
NCER CMU Naftogaz MECU UTG Naftogaz UTG NATURAL GAS TRANSPORTATION, DISTRIBUTION AND STORAGE TARIFFS
Tariffs for natural gas transportation, distribution and storage via Gas Transmission System of Ukraine are subject to approval by the National Commission of Energy Regulation. Presently, the issue is governed by the Resolution of NCRE dated 28.12.2011 #131.
2nd of September, 2013 NCRE temporarily decreased storage tariffs 2.6 times – by 18 UAH/1000 cu.m (1.66 euro), tariffs for withdrawal and injection to UGSs 4.4 times – by 7.5 UAH/1000 cu.m (0.69 euro).
In its turn, as per the mentioned resolution general transportation tariff amounts to 305,6 UAH/1000 cu.m (28.25 euro), transportation tariff for Ukrtransgas is 106.9 UAH/1000 cu.m (9.88 euro), transportation tariffs for customers directly connected to GTS is 265.1 UAH/1000 cu.m (24.5 euro) and transportation tariff for transportation via distribution gas pipelines is 198.7 (18.37 euro). Interaction of the market participants for natural gas transporting and transit services
Procedure of access to the United NCER is a body, GTS of Ukraine, regulating adopted by NCER an access to GTS
Naftogaz of Ukraine – Gas Transit Agreement (Gazprom) GTS Operator
Ukrtransgaz is Transportation and Storage a company, Agreements with Customers maintaining GTS
Industrial Customers (less Gas Distribu- than 3 million / year of gas) Guaranteed ting companies suppliers (oblgaz) GAS PRICES FOR END-USERS IN UKRAINE
CUSTOMERS PRICES (USD/1000 cu.m)
Regulated households and heating plants as per the category: 1 Category 1 (up to 2500 cu.m/year) Up to 100
2 Category 2 (up to 6000 cu.m/year) Up to 150
3 Category 3 & 4 (up to 12000 cu.m/year and Up to 370 more) 4 Regulated industrials 500 - 600
5 Non-regulated industrials 400 - 500 INTERACTION OF THE MARKET PARTICIPANTS FOR NATURAL GAS SALE IN THE DOMESTIC MARKET OF UKRAINE State Budget Funds of Ukraine
PJSC “Ukrgazproduction” NJSC “Naftogaz of Ukraine»
SJSC “Chornomornaftogaz” Gas Distributing Companies Licensed Gas Traders (about 450)
Householders and Industrial Heating Plants Customers CATEGORIES OF NATURAL GAS CUSTOMERS IN UKRAINE Category Forecasted Yearly Volume of Supply for 2013 (mln. cu.m) Production and technological needs of UTG, 4,500 gas distributing companies, gas producing companies and refineries
Utilities, Budget Institutions (regulated low 17,430 prices) Heat generating facilities , power stations 6,300 (regulated low prices)
Industrial enterprises 24,120 GOVERNMENTAL PLANS FOR THE NEAREST FUTURE
1. Implementation of the 3rd Energy Package and adaptation of the Ukrainian gas market to the European one.
2. Active growth of the domestic natural gas production through attraction of foreign investments.
3. Establishment of a new “Slovakia – Ukraine” reverse gas supply corridor.
4. Development of a new gas supply route “Croatia - Hungary – Ukraine”.
5. Construction of LNG terminal on the Black Sea coast.
6. Creation of a new gas hub in Ukraine. Should you need more detailed information on the mentioned issues or have any additional inquiries please do not hesitate to contact me: