Mediation conducted by Secretariat’s Dispute Resolution Centre results in launch of daily gas balancing in Ukraine

1 March 2019

As of today, Ukraine’s gas transmission system is finally balanced on a daily basis. The new regime provides increased system efficiency, thus delivering benefits to Ukrainian energy consumers and the wider economy. A long awaited change by all network users was enabled by the successful mediation between the Ukrainian gas transmission system operator, Ukrtransgaz, and the Ukrainian National Energy and Utilities Regulatory Commission, NEURC, under the Secretariat’s Dispute Resolution and Negotiation Centre.

For the last two years, the unresolved balancing rules led to a situation where 1-2 bcm of gas was withheld from the market each year, obstructing the development of a truly liquid natural gas market in Ukraine. The dispute was a bone of contention between Ukrtransgaz and Ukraine’s distribution companies known as ‘oblgazes’, which accused each other of huge economic losses on account of the lack of proper balancing rules, among other issues.

With six out of the seven disputed issues successfully resolved, the mediation has led to amendments to the Gas Transmission Code adopted by the regulator, in particular regarding financial guaranties, trade notifications and transmission contract cancelation, which made today's transition to initiated daily balancing possible. The last open issue - unauthorized off-take of gas - is partly related to the public service obligation decree, which will expire in May 2020, and partly with the inappropriate distribution tariff, which is still in the process of revision.

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