Ukraine storage, transmission gas operators adopt temporary solution for energy unit conversions

LONDON (ICIS)–The Ukrainian gas storage operator UTG has reached a temporary solution for a legal misalignment over gas measurements which could have affected injections or withdrawals into and from Ukrainian stocks under the customs warehouse regime.

Under the temporary arrangement, UTG would accept volumes listed both in KWh and in cubic metres. The formula would apply strictly to customs declarations and gas-related customs clearance operations, the company said in a statement on Tuesday.

Shippers looking to inject or withdraw gas under the customs warehouse regime would be required to submit a periodic customs declaration as well as data related to cross-border capacity allocations for volumes entering or expecting to exit the system. These details would be provided by the gas transmission system operator GTSO.

In a statement to the press, Sergiy Makogon, CEO of GTSO said that in order to register gas at customs, the operators would use a coefiicient to convert cubic metres into energy units (KWh). Conversions will be calculated seperately for each lot of natural gas based on the indicators of quality certificates for border connection points where individual volumes were imported or would be exported. The information will be provided by GTSO.

The customs warehouse regime allows companies to import gas into the country and keep it in local storages without requiring customs clearance for three years.

The latest arrangement will be in place until the parliament adopts a bill mandating the conversions into KWh.

The temporary solution was introduced because the local customs office adopted the energy conversions on 1 April under a separate law which requested the switchover from that date.

This led to a mismatch between the new specifications required by the customs office and the arrangements that are still in place at UTG.

A shipper said many non-resident companies may have been affected if the operators had not adopted the temporary solution.

If adopted shortly, the law could be enforced as early as 1 May.

However, two sources active in the market said some companies were opposed to the measure.

The bill has been subject to discussions since last year following disagreements over the gross calorific value (GCV) used in the conversion formula.

Initial draft proposals on the unit changes indicated that a GCV of 10.35 would be used.

However, this was subsequently changed to 10.59, which is now expected to be embedded in the conversion formula once the law comes into force.

If the lower, 10.35 GCV had been adopted, some companies may not have been able to withdraw as much gas as they had injected.