ESP aims to improve Ukraine’s gas sector across the entire value chain through activities in upstream, midstream, and downstream segments. Our work, in coordination with the Government of Ukraine, is focused on initiatives that enhance energy security through the introduction of global best practices, increased transparency, and fairness to end-users and investors.
ESP seeks to support Ukraine’s objective of reducing its dependency on imported gas supplies through improved efficiency throughout the sector, and by enhancing domestic production.In addition, to advance integration with European markets, ESP is supporting Ukraine with the development of gas policies and regulations in line with European standards.
UPSTREAM – PRODUCTION
Maximizing the Benefits of Gas Production for Ukraine
ESP supports the Government of Ukraine to establish and implement production sharing agreements (PSA), from legal assessments to advising on tenders that apply advanced practices for hydrocarbon production, all to ensure that Ukraine benefits as much as possible from the gas value chain. Based on a set of stakeholder consultations, ESP drafted a model PSA that can be used to expedite or assess future tenders and ensure transparency and competitiveness in the hydrocarbon production market. To enhance the agreement, the project has also recommended amendments to the legal and regulatory framework that will attract private investment and enhance gas sector competitiveness.
Ensuring Clear and Consistent Rules
ESP supports the Government of Ukraine to establish a Gas Exploration and Production Regulator, an independent body to monitor and manage agreements between the state and investors. This regulator would have several benefits: simplifying the subsoil usage process, improving the tendering process for special permits/PSAs, and attracting private investment to increase natural gas production and decrease dependence on natural gas imports. Overall, the regulator’s purpose would be to protect the interests of both Ukraine and its people.
Improving Access to Information
ESP is helping create a natural gas geological data warehouse to make data accessible to all. Breaking down a key information barrier to foreign investment will make Ukraine’s gas sector more attractive to investors and encourage global participation in hydrocarbons exploration and production. This digital data warehouse will display information in both Ukrainian and English.
MIDSTREAM – TRANSPORTATION
Strengthening the System
ESP supports the procurement of dispatch control and data collection systems (SCADA or Supervisory Control and Data Acquisition) and Electronic Data Management (or EDM) for the Ukrainian gas transmission system operator. These systems increase the steadiness and stability of natural gas system operations, decrease the risk of contingencies, enhance cybersecurity and upgrade monitoring functions. They also permit detailed analytics and qualitative data management, which will improve efficiency, help the operator meet EU legal and regulatory requirements, and enable Ukraine to harmonize its legislation with EU law. ESP will also provide a data management strategy that enhances internal business process management and maximizes the value of data collected in the system.
DOWNSTREAM – DISTRIBUTION
Gas Distribution Modernization. ESP supports Ukraine’s natural gas sector by identifying and, when appropriate, addressing system inefficiencies in gas distribution.
Promoting Fair Tariffs
To support fair gas prices, ESP will conduct a survey of how gas distribution costs are determined.
Developing Open and Competitive Markets
ESP is working with partners to establish a natural gas commodity exchange that will enhance competition and energy security. With a competitive exchange determining prices, market transparency will increase and customer costs will fall. The project is determining system requirements, functions and responsibilities as well as supporting the government to identify and procure market clearing software.
Integrating with Europe
To harmonize Ukrainian natural gas policy with EU requirements and encourage integration with the EU, ESP is helping the Ministry of Energy draft a law to change natural gas consumption metering units from cubic meters (m3) to kilowatt hours (kWh). The team will support a public outreach campaign to explain the reason behind the change and its advantages for customers and the country as a whole.
ESP is assisting the Ministry of Energy to adopt and introduce natural gas quality and safety standards that will ensure high quality for consumers, align gas market operations with Europe, and increase Ukraine’s energy security.
To strengthen natural gas market participants’ capacity, ESP will develop a comprehensive training program for the professional education and certification of Ukraine’s energy traders. Sustainable capacity building for public and private sector traders will ensure equal opportunities, and the program will foster the development of professional ethics and open energy markets.