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Natural gas market for the gas suppliers: what agreements do market participants conclude?

Compared to the electricity market, which appeared in Ukraine less than half a year ago, the new natural gas market has been operating in Ukraine for several years.

However, enterprises, which have obtained a Natural Gas Supply License, usually do not know that it is not the only prerequisite to be able to supply natural gas to consumers. After obtaining a license, it is necessary to register as a gas market participant and conclude a certain number of agreements with other gas market participants. This will also allow you to increase your earnings by expanding the number of services you can provide to your customers.

In this publication, we will talk about what agreements shall be signed in the natural gas market and why.

Related article: Obligatory Site Requirements For Obtaining A License To Supply Gas Or Electricity

Agreements that must be concluded by the gas supplier to start its business activity

Gas for supply. Before you can supply natural gas, you shall be able to buy it. To do this, you need to conclude an agreement with the gas seller.

In Ukraine, gas is sold by the NJSC Naftogaz of Ukraine, a monopolistic enterprise in this area.

It is important to carefully read the terms of the agreement and to envisage all the provisions that are important for your company.

Gas transportation. The gas supplier usually does not have adequate transmission and distribution networks to supply gas directly to consumers. Therefore, after obtaining the license, the company has to get registered with Ukrtransgaz, JSC and sign the relevant agreement for the transportation of gas through the existing gas transmission systems.

This agreement will serve as a basis for your activity, therefore, the signing of this agreement must be taken very seriously.

Connection with consumers. In order to be able to supply gas, it is necessary to conclude an agreement with the Gas Distribution System Operator, which is available in each region and carries out the physical delivery of gas to the consumers.

Such an agreement shall be signed with the Gas Distribution Operator at the location of future consumers.

Related article: Our Company’s Successful Experience In Obtaining A License To Supply Electricity And Natural Gas On A Turn-Key Basis

A Gas Supply Agreement between the Supplier and the Consumer

After signing agreements with the abovementioned market entities, the Supplier is entitled to supply gas to the Consumer, who:

  • has a gas consumption object connected to the gas distribution system;
  • has a unique EIC-code assigned by the Gas Distribution Operator.

The last stage before the Gas Supplier can start its activity is the conclusion of the Natural Gas Supply Agreement by and between the Supplier and the Consumer and inclusion of the Consumer in the Supplier’s Register of Consumers for the period of the agreement duration.

Related article: Our Lawyers Obtained A Gas And Electricity Supply License For The Polish Energy Company

Thus, the license entitles the supplier to supply natural gas, but to start business activities, the supplier has to conclude a number of agreements with other gas market players.

If you want all your agreements to contain the necessary provisions for the success of your gas supply business, call us! We will do our best to ensure smooth and fast entry of your company into the gas and the electricity market of Ukraine.

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