Ukraine declared an intention to reform the national gas market and align the respective regulations with the EU rules yet back to 2009 when country was considering to join the Energy Community Treaty. The main reasons were to seek access for alternative sources of gas supply after winter-2009 gas crisis with Russia and cheap Western money to invest into modernization of the national gas transmission system (GTS).
Maidan upraising and the subsequent hostilities with Russia among other things resulted in halt of Russian gas supplies and forced Kyiv to seek for alternative supplies and closer integration with EU gas markets. As a result, shortly after the signing of the Association Agreement with the EU (2014) Ukraine passed a framework Law On the Natural Gas Market in which the political goal to reform national gas market in line with competitive model prescribed in EU energy Packages become legally binding.
The progress, however, appeared to be mixed as deep structural changes of vertically integrated monopolies at national and regional levels did not follow quick progress in gas imports from the EU and wholesale supply to large industrial consumers. In particular, separation of gas transmission and storages activities from other types of business of the national oil & gas company Naftogaz NJSC (or ‘unbundling’ in legal terms that is the key to competition on gas markets) stuck in a heavy conflict over the choice of a specific unbundling model between the Government and company management that were representing the different vested interests of the former ruling coalition and was resolved only in 2019.
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Dmytro Naumenko
Senior analyst, UCEP
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