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Volodymyr Kistion: Government of Ukraine is committed to pursuing reforms in energy sector
27.02.2018 | 17:19

Ukraine is mainstreaming into the European economic space by implementing, in particular, the national legislation in energy sector aligned with the norms adopted in the European Union. We are moving along the path of deregulation and liberalization of the gas market in Ukraine. This is clearly enshrined in the Energy Strategy of Ukraine until 2035, which was approved by the Government of Ukraine in 2017. This was stated during the Ninth Annual Energy Forum by Vice Prime Minister of Ukraine Volodymyr Kistion.

According to him, the reform of the gas market remains among the most challenging reforms, meanwhile Ukraine is approaching, step by step, the ultimate goal of establishing transparent market relations for the benefits of all categories of consumers.

"Ukraine has already created a series of prerequisites for the functioning of an effective gas market. There are currently more than 384 gas suppliers licensed by NEURC. In the second half of 2018, we are planning to provide daily commercial gas balancing, which would allow us to reduce severalfold manipulating with the volumes of gas consumed and to launch a daily exchange trade, thereby affecting the formation of a real indicative market price for natural gas in Ukraine, but not outside its borders", said the Vice Prime Minister.

According to Volodymyr Kistion, for traders that have an opportunity to buy gas in periods of low prices and have a desire to keep this gas in Ukraine in underground storage facilities without customs clearance for up to 3 years, there has been created a special customs warehouse regime for a period of up to 1095 days.

The Vice Prime Minister also stressed that the Government of Ukraine is eager to make Ukraine self-sufficient in energy and to transform it from being gas importer into its exporter. "Ukraine ranks third in Europe for volumes of explored gas reserves after Norway and the Netherlands. The amount of proved reserves in Ukraine makes up 930 billion cubic meters. To date, the state produces only 2% of the proven reserves, while successful countries in the world extract from 6% to 16%. Therefore, the energy potential in Ukraine has not been unlocked yet, but we are working hard to solve this problem," stressed Volodymyr Kistion.

He reminded that approved by the Government of Ukraine in 2016 the Concept for the development of the gas industry contains a clear target to reach 27 billion cubic meters of Ukrainian gas production by 2020. And last year Ukraine has reached a record level for the last 24 years and improved performance up to 15.25 billion cubic meters.

This, in the opinion of the Vice Prime Minister, has proved possible due to solving problems with the issuance of special permits to the state company for gas extraction, improvement of the regulatory framework, new modern rules for the development of oil and gas fields. The performance of this year should even improve, as by joining efforts the Cabinet of Ministers and the Verkhovna Rada have managed to reduce the tax burden on gas producers - the best in Europe stimulating rental rates were established and a five year moratorium on the change of tax regime for gas producers introduced.

"We are up to the actualization of 2020 gas extracting concept and the Government has already developed certain solutions. A new version of the order of disposal of geological information has been drafted, we are waiting for the adoption of it in the near future. This would enable potential investors to make a balanced decision on the effectiveness of launching and the scale of the mining business in Ukraine," stressed the Vice Prime Minister.

Volodymyr Kistion added that the Government’s team engages in elaborating of an updated version of the Subsoil Code, the adoption of which is meant to bring the regulatory regime of subsoil use in Ukraine in compliance with the best global practices.


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