The SSO of Ukraine introduces the exchange trading of gas in UGS
The Storage System Operator of Ukraine and the Ukrainian Energy Exchange have signed an agreement on cooperation, which provides customers of storage services (injection, withdrawal) of natural gas with standardized products for exchange trade of natural gas, stored in UGSFs of Ukraine. The new functionality will allow companies to speed up and optimize gas trading operations, increase their reliability, and help to improve the final result of bidding by attracting a wider range of participants.
Cooperation between the Storage System Operator (hereinafter - the SSO) and the Ukrainian Energy Exchange (hereinafter - the UEEX) will be implemented in two stages.
At the first stage, participants of the Ukrainian gas market will be able to carry out trade operations with customs-cleared natural gas stored in UGS through the platform of the Ukrainian Energy Exchange.
The new functionality will be available from mid-March and will be relevant primarily for Ukrainian companies. Those will be able to trade gas through the UEEX platform, significantly optimizing and reducing the time for the bidding itself. If earlier preparation of one such contract took up to two days, the exchange platform will allow to carry out similar procedures within 3 hours. At the same time, the SSO of Ukraine will act as a guarantor of the amount of gas declared for bidding in the UGS and will ensure the automation of its transfer from one bidder to another within 30 minutes. After that, the UEEX in cooperation with the bank will automatically perform clearing settlements using escrow accounts.
At the second stage of the agreement's implementation between the SSO and UEEX, the possibility of gas trading through the UEEX platform will be extended to customers who store gas in Ukrainian UGS in the “customs warehouse” and “customs warehouse + Short-haul” regime. Therefore, non-resident companies who store their gas in Ukraine will receive access to the new functionality.
The transition to exchange trading will contribute to further liberalization of Ukraine's energy market, increase its liquidity, strengthen the reliability and transparency of mechanisms of the sale/purchase/transfer of gas from one owner to another.
«Considering the fact that today gas trading in Ukraine often takes place at the level of personal contacts, such a step can be considered a real breakthrough for our market. Now gas bidding will become more transparent, more reliable, and more companies will be able to join it. Healthy competition always plays in favor of the market. Ukraine will also benefit as an international player: we'll become even more interesting and convenient for our foreign customers», - stated Sergiy Pereloma, acting general director of Ukrtransgaz JSC.
«The great potential of the natural gas market in Ukraine dictates the need for new, modern tools that would intensify the trade of natural gas in UGS. The development of gas trade in underground storage facilities expands the use of gas storage infrastructure, promotes Ukrainian gas market development, and the creation of a national gas hub. We receive requests from market participants for a trading instrument that will ensure the formation of price indicators for gas with a transmission point at the UGS and can be a serious impetus for development, including the short-term gas market in Ukraine», - noted Oleksii Dubovskiy, Chairman of the Exchange Committee of the Ukrainian Energy Exchange.