On June 5, at the government meeting, amendments were made to the methodology of natural gas price formation for the population. Now, the price of natural gas under the Regulation on the imposition of special obligations (PSO) will be equal to the minimum value of the following four:
- Цueex (Pueex) - weighted average price of a monthly natural gas resource for the gas month of sale/delivery based on the results of electronic exchange trading at the Ukrainian Energy Exchange at the beginning of this gas month;
- Цмерт (Pmert) - average customs cost of imported natural gas, based on the results of the gas month, which precedes the month of sale/delivery, is published by the Ministry of Economic Development;
- Цнакпр (Pnakpr) - average arithmetic price of natural gas sale/delivery by Naftogaz of Ukraine for industrial consumers, provided that payment is made prior to the period of gas supply in effect in the gas month preceding the month of sale/delivery;
- Цпсо (Ppso) - price calculated according to the formula given in paragraph 12 of the PSO and amounts to 7,184.8 UAH per thousand cubic meters without VAT and tariffs for transportation and distribution from May 1, 2019.
Natural gas has been traded on the Ukrainian Energy Exchange since January 2017. Now more than 200 companies are participants of trading sessions in this direction. Among them are domestic mining companies, Ukrainian and international traders.
As of June, out of all sources of natural gas prices, which are elements of the formula, the weighted average price of the Ukrainian Energy Exchange is the lowest and amounts to 5,553.89 UAH per thousand cubic meters, excluding VAT, transportation and distribution costs of natural gas.
"We welcome the changes to the pricing formula of the PSO. The inclusion of several price sources in the calculation methodology is a step towards liberalizing a significant market segment that has recently been controlled exclusively by the government. The weighted average price of the Ukrainian Energy Exchange objectively reflects the situation on the wholesale natural gas market, primarily because both Ukrainian mining companies and international traders who purchase and sell imported resources participate in trading. Changes in this methodology is a positive signal for European partners. The signal indicates an increase in transparency in the segment of gas sales to the population." - Oleksandr Kovalenko, CEO of the Ukrainian Energy Exchange commented on the situation.