LAW OF UKRAINE

of July 8, 2010 No. 2467-VI

About bases of functioning of the natural gas market

This Law determines legal, economic and organizational basis of functioning of the natural gas market.

Section I. General provisions

Article 1. Determination of terms

1. In this Law the stated below terms are used in such value:

1) algorithm of distribution of means - procedure for distribution by authorized bank of funds from current accounts with the special mode of use without payment orders which is set by the National commission performing state regulation in the field of power;

2) vertically integrated economic organization - the subject of housekeeping formed according to the legislation for the purpose of carrying out economic activity in the natural gas market which performs at least one of functions of transportation, distribution or storage of natural gas and at least one of functions of its delivery or production;

3) the owner of natural gas - person irrespective of pattern of ownership and the sphere of management which possesses natural gas on the property right, including on the right arising based on cooperation agreements;

4) the gas company - subject of housekeeping which according to special permission to use of natural resources extracts natural gas in the territory of Ukraine and within the continental shelf and/or exclusive (sea) economic zone of Ukraine;

5) the gas-saving company - subject of housekeeping which based on the license performs pumping, storage and gas offtake to customers;

6) the gas supplying company (further - the supplier) - subject of housekeeping which based on the license performs supply of natural gas directly to consumers according to the signed agreements;

7) the gas-distributing company - subject of housekeeping which based on the license performs transportation of natural gas by gas distribution networks directly to consumers in property or in use of which gas distribution networks and other production facilities and which performs concerning them functions on operational technology management stay;

8) gas distribution networks - the industrial complex consisting from organizationally and the objects which are technology connected among themselves intended for distribution of natural gas from gas distribution stations directly to consumers;

9) gas transmission company - subject of housekeeping which based on the license performs transportation of natural gas by the trunk gas pipelines staying in its property or use and performs concerning them functions on operational technology management;

10) the guaranteed supplier - determined according to the procedure, established by the Cabinet of Ministers of Ukraine, the gas supplying company which has no right to refuse to the consumer the conclusion of the delivery agreement of natural gas except the cases determined by part seven of article 12 of this Law;

11) the Single gas-transport system of Ukraine - the industrial complex consisting of trunk gas pipelines and gas distribution networks, underground gas storages and others organizationally and technology related objects and constructions intended for transportation, distribution and storage of natural gas;

12) the customer - the subject of the natural gas market which based on the agreement orders provision of one or several of such services:

accession of own objects to the Single gas-transport system of Ukraine;

transportation of natural gas by trunk gas pipelines;

transportation of natural gas by distribution pipelines;

transit of natural gas across the territory of Ukraine;

storage of natural gas in underground storage warehouses.

13) the skilled consumer - the consumer whose skill level corresponds to the degree determined by the National commission performing state regulation in the field of power and who has the right freely to buy gas from any supplier;

13-1) high-level networks (the high-level pipeline networks, trunk gas pipelines) - technology complex which functions as single system and which the separate gas pipeline with all objects and constructions, related single engineering procedure, or several gas pipelines which perform transit, interstate, interregional transportation of natural gas from acceptance Items to Items of transfer of natural gas, including to gas distribution networks for the purpose of further distribution enters;

13-2) border of balance sheet accessory - split-off point of gas networks between adjacent owners of gas networks on signs of the property right, economic maintaining or use;

13-3) place of ensuring (providing point) the capacity (ordered to accession) - the place (point) in the existing gas networks of the gas or gas-distributing transportation company from which the gas-distributing or gas transmission company provides development of gas networks for the purpose of accession of objects of gas consumption of the customer of the corresponding capacity;

13-4) place of accession (accession point) - the designed or existing border of balance sheet accessory of objects of system of gas consumption of the customer;

14) the operator of the Single gas-transport system of Ukraine (further - the operator) - gas transmission company to which the decision of the central executive body providing forming of state policy in oil and gas complex assigns functions of supervisory control on production, transportation, storage and distribution of natural gas for the purpose of ensuring regular and accident-free gas supply of consumers of Ukraine;

Functions of the operator of the Single gas-transport system of Ukraine are assigned to the company which founder and the owner the state can be exclusive, including through Public joint stock company "National joint stock company "Naftogaz Ukrainy", or (in case of creation of joint business) the state, including through Public joint stock company "National joint stock company "Naftogaz Ukrainy" (ownership at least 51 percent of corporate laws), and also the legal entity (legal entities), belongs and is controlled by residents of member states of the European Union, the United States of America or Energy Community and is operator of gas transportation system or the member of the European network of operators of gas transportation system, certified according to requirements of Article 10 of the Directive 2009/73/EU of the European Parliament and Council of the European Union of rather general rules for the domestic market of natural gas, Article 3 of Regulations 715/2009 European Parliament and the Council of the European Union about conditions of access to networks of transfer of natural gas. According to the decision of the central executive body, providing forming of state policy in oil and gas complex, functions of the operator of underground gas storage can be separated and assigned to the separate company - operator of underground gas storage. The Verkhovna Rada of Ukraine on representation of the Cabinet of Ministers of Ukraine approves results of tender and makes the final decision by determination of the legal entity - the nonresident in the company to whom functions of the operator of the Single gas-transport system of Ukraine are assigned. Conditions of tender are developed and affirm the Cabinet of Ministers of Ukraine. For participation in tender the legal entity - the nonresident reveals structure of property of founders - legal entities which allows to identify physical persons - owners of essential participation in these legal entities. Changes in structure of property of the legal entity - the nonresident, by results of tender it was approved as the cofounder of the company to whom functions of the operator of the Single gas-transport system of Ukraine are assigned, shall be previously approved by the Cabinet of Ministers of Ukraine.

The founder or the owner of the legal entity - the nonresident, is member of the company to whom functions of the operator of the Single gas-transport system of Ukraine are assigned, shall have at least five years' experience of management of gas-transport system in the American or European market. By results of each five-year term of work the operator of the Single gas-transport system of Ukraine created with the assistance of the legal entity - the nonresident, provides the report to the Verkhovna Rada of Ukraine.

14-1) operator of underground gas storage - gas-saving the company on which the decision of the central executive body, providing forming of state policy in oil and gas complex, assigns functions on storage of natural gas for the purpose of ensuring uninterrupted and accident-free operation of underground gas storage.

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