The Law envisions:

—    legal, economic and organizational fundamentals of operation of the natural gas market;

—    creation of regulatory basis for activity in the natural gas market;

—    provision of nondiscrimination access to the natural gas market, its subjects and all consumers;

—    creation of full natural gas market in Ukraine on fundamentals of free competition with proper level of protection of consumers (in particular, those categories of consumers, which need particular protection); reliability of energy supplies and capability of integration with natural gas markets of the Energy Community parties, inter alia through the creation of oblast natural gas markets.

To ensure competition in the commodity market of natural gas, the Law introduces the mechanism of separation of activity related to management of gas infrastructure from the activity of vertically-integrated organizations related to extraction and delivery of natural gas.

The Law enshrines state regulation in the markets of services of transportation, distribution, storage of natural gas and services of installation of LNG, which lies in:

—    introduction of mandatory access to respective infrastructure for all customers and determination of exclusive grounds for rejection in access;

—    validation of the market of methodologies and tariffs for such services by the regulator;

—    use of standard-form contracts for transportation, distribution, storage of natural gas.

The Law envisions creation of commodity market of natural gas, which will include wholesale and retail markets.

In both segments effective is:

—    the principle of free pricing (except for the cases when the Cabinet of Ministers of Ukraine uses right to additionally bind subjects of natural gas market with special obligations);

—    freedom of selection of sources of natural gas.

The Law offers to oblige wholesale sellers only to retain and provide information about their operations (which is important for monitoring of competition both in the wholesale and retail markets) on request of authorities or the Energy Community Secretariat.

Regulation of relations in the retail market is conditioned by necessity for protection of consumer rights; however, the level of interference of the state in such relations depends on the category of consumers:

—    natural gas supplies to household consumers have to be provided in compliance with standard-form contracts approved by the regulator;

—    natural gas supplies to all other categories of consumers will take place on the basis of supply contracts, whose requirements are freely determined by the parties, but should contain terms envisioned in the draft law (for instance, requirement as to provision of a consumer with the right to choose ways to pay; guarantees of pre-schedule termination of gas supplies contracts in case consumers do not accept new conditions of gas supplies offered by suppliers).

In compliance with the Law the natural gas market participants are:

Wholesale trader:

—    activity of wholesale trader is not subjected to licensing;

—    buys natural gas from Ukrainian extracting companies or wholesale traders, as well as from foreign extracting companies or wholesale traders;

—    sells gas to wholesale trader or supplier under purchase-and-sale agreements;

Supplier:

—    natural gas supplies (i.e. sale of natural gas directly to consumers) is subjected to licensing;

—    buys natural gas from Ukrainian extracting companies or wholesale traders, as well as from foreign extracting companies or wholesale traders;

—    signs standard-form contracts approved by the regulator with consumers;

—    signs agreements that contain essential terms envisioned by the draft law with other consumers;

—    takes part in creation of insurance reserves of natural gas.

Besides, the Law envisions function of “last resort” supplier (guaranteed supplier), who has right to deliver natural gas in exclusive cases (bankruptcy, termination or annulment of licenses and other exclusive circumstances), but:

—    prices for natural gas of such supplier should not affect competition in the market (i.e. have to be higher than the market ones);

—    such a supplier provides supplies during maximum term offered by the draft law (45 days).

Other participants of the natural gas market will also be consumers, vulnerable consumers and protected consumers.

Consumer:

—    buys natural gas from supplier;

—    has right to freely choose suppliers;

—    has right to address guaranteed supplier appointed by the Cabinet of Ministers of Ukraine via tender for the period of three years in case of bankruptcy of a supplier, termination or suspension of his/her/its license. Such a supplier can deliver natural gas during 45 days, but at higher price.

Vulnerable consumer is a household consumer with special status in order set by the Cabinet of Ministers of Ukraine, which determines category of vulnerable consumers and the order of provision them with targeted aid.

Protected consumer is a consumer enjoying special measures on security of natural gas supplies in compliance with bylaws of the Ministry of Energy and Coal Industry. Protected consumers are: household consumers connected to gas distribution system; enterprises, institutions, organizations engaged in rendering important social services and connected to the gas transport system or a gas distribution system; as well as, in some cases, producers of heat energy for the needs of such consumers or enterprises, institutions, and organizations.

In compliance with the document, operators of gas infrastructure:

—    have to render services of transportation, distribution, storage, services of LNG installation to all applicants;

—    in order to satisfy needs of the market in capacity of gas infrastructure, respective operators elaborate and submit for regulator’s approval respective codes (code of gas transport system, code of gas distribution system, code of gas storage facilities, and code of LNG installation);

—    sign standard-form contracts approved by the regulator;

—    independence of operators of gas infrastructure facilities ensures opportunity to select suppliers.

Respective draft law was registered under No. 2250.