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LAW OF UKRAINE

of April 9, 2015 No. 329-VIII

About the natural gas market

(as amended on 03-12-2020)

This Law determines the legal basis of functioning of the natural gas market of Ukraine based on the principles of free competition about consumer protection and safety of supply of natural gas, and also capable to integration with the natural gas markets of the states - the parties of Energy Community, including by creation of the regional natural gas markets.

Section I General provisions

Article 1. Determination of terms

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

1) safety of supply of natural gas - the reliable and regular supply of necessary amounts of natural gas to consumers, is provided with the available sources of natural gas, and also proper technical condition of gas-transport and gas-distribution systems, gas storages and the LNG installations;

2) vertically integrated organization - the legal entity irrespective of legal form and pattern of ownership, physical person which performs economic activity including which exercises control over other legal entity or physical person or the group of such faces tied among themselves directly or indirectly by the control relations performs at least one of functions of transportation, distribution, storage (downloading, selection) gas or rendering services of the LNG installation and at least one of functions of delivery or natural gas production;

3) free capacity - part of technical capacity of object of gas infrastructure which right to use is not granted to customers or is not implemented by the customer under the agreement on provision of the corresponding services;

4) vulnerable consumers are residential customers who acquire the right to government assistance according to the procedure, established by the Cabinet of Ministers of Ukraine;

5) settlements of overloads - taking measures of gas-transport system by the operator, operator of gas-distribution system, the operator of gas storage or the operator of the LNG installation for the purpose of ensuring the maximum capacity utilization of gas-transport system, gas-distribution system, gas storage or the LNG installation taking into account requirements of integrity of gas-transport system;

6) gas-distribution system - the technology 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;

7) gas-transport system - technology complex which the separate trunk gas pipeline with all objects and constructions, related single engineering procedure, or several such gas pipelines on which transportation of natural gas from point (points) of entrance to point (points) of exit is performed enters;

8) access - right to use by capacity of object of gas infrastructure in amount and on the conditions established in the service provision agreement of transportation, distribution, storage (downloading, selection) gas or services of the LNG installation;

9) the customer - physical person or legal entity which based on the agreement orders provision of one or several of the following services:

accession to gas-transport or gas-distribution system;

transportation of natural gas;

distribution of natural gas;

storage (downloading, selection) of natural gas;

LNG installation services;

10) the protected consumers are the residential customers attached to gas-distribution system the companies, organizations, the organizations performing provision of essential public services and producers of heat energy for needs of such consumers or the companies, organizations, the organizations are attached to gas-transport or gas-distribution system, and also provided that production of heat energy for needs of such consumers or the companies, organizations, the organizations is performed by means of the objects which are not adapted for change of fuel and attached to gas-transport or gas-distribution system;

11) the code of gas-transport system, the code of gas-distribution systems, the code of gas storage, the code of the LNG installation - the service regulation and access to gas-transport system, gas-distribution system, gas storage, the LNG installation which affirm the Regulator;

12) the controller - person responsible for monitoring and the reporting on condition of fulfillment of requirements on department and independence of the operator of gas-transport system;

13) control - decisive influence or possibility of implementation of the solving influence on economic activity of the subject of the natural gas market is performed, in particular, by realization of right of possession or use of all assets of such subject or their considerable part, the rights of the solving influence on forming of structure, results of vote and decision making of such subject by bodies and so forth;

14) crisis situation on intake of natural gas (further - crisis situation) - approach of unexpected and unpredictable circumstances, including circumstances which could be provided, but the prevention of which by responsible subjects of powers of authority was objectively impossible that entailed or can entail restrictions or the termination of intake of natural gas for the natural gas market of Ukraine or other obstacles for safe and smooth operation of gas-transport system, gas-distribution system, gas storage or the LNG installation;

15) the National plan of action - the action plan on case of crisis situation which affirms the central executive body providing forming and realization of state policy in oil and gas complex;

16) objects of gas infrastructure - gas-transport systems, gas-distribution systems, gas storages, the LNG installation;

17) the operator of gas-distribution system - subject of managing which based on the license performs activities for distribution of natural gas gas-distribution system for benefit of the third parties (customers);

18) the operator of gas storage - subject of managing which based on the license performs activities for storage (to downloading, selection) gas with use of one or several gas storages for benefit of the third parties (customers);

19) the operator of gas-transport system - subject of managing which based on the license performs activities for transportation of natural gas for gas-transport system for benefit of the third parties (customers);

20) the operator of the LNG installation - subject of managing which based on the license performs activities for provision of services of the LNG installation for benefit of the third parties (customers);

21) the wholesale buyer - the subject of managing who acquires natural gas based on the purchase and sale agreement not for own consumption;

22) the wholesale seller - the subject of managing who implements natural gas to the wholesale buyer or the supplier based on the purchase and sale agreement;

23) the residential customer - physical person which acquires natural gas for the purpose of use for own domestic needs, including for cooking, heating of water and heating of the premises, not including professional and business activity;

24) the official of the legal entity (the operator of gas-transport system, the owner of gas-transport system, the operator of gas-distribution system, the operator of gas storage, the operator of the LNG installation) - the physical person - the chairman or the member of the supervisory board, executive body (the chairman and members of collegiate executive body; person performing powers of sole executive body), audit committee, the auditor, and also the chairman and members of body of the legal entity if formation of such body is provided by the charter or other constituent document of such legal entity;

25) LNG installation services - the economic activity which is subject to licensing also consists in transformation of natural gas from gaseous in liquid condition (liquefaction) or transformation of liquefied natural gas with liquid in gaseous state (regasification) by means of the LNG installation;

26) the supplier of "the last hope" - the supplier determined by the Cabinet of Ministers of Ukraine who has no right to refuse the conclusion of the delivery agreement of natural gas for limited period of time;

27) the supplier of natural gas (further - the supplier) - subject of managing which based on the license performs activities for supply of natural gas;

28) supply of natural gas - economic activity which is subject to licensing and consists in realization of natural gas directly to consumers based on the agreements signed with them;

29) capacity - the most admissible overflowing of amount of the natural gas expressed in energy units to unit of time, provided to the customer according to the service provision agreement of transportation, distribution, storage (downloading, selection) gas or services of the LNG installation;

30) accession - set of organizational and technical actions, including the works directed to creation of technical capability for provision of services of transportation or distribution of natural gas which are performed in connection with connection of construction object or the existing customer's object to gas-transport or gas-distribution system;

31) natural gas, oil (passing) gas, gas (methane) of coal fields and gas of slate thicknesses, gas of collectors of dense breeds, gas of central basin type (further - natural gas) - mix of hydrocarbons and not hydrocarbonic components which is in gaseous state under standard conditions (pressure - 760 millimeters of mercury and temperature - 20 degrees Celsius) and is products;

32) the Regulator - the national commission performing state regulation in the field of power and utilities;

33) the natural gas market - set of the legal relationship arising in the course of purchase and sale, supply of natural gas, and also provision of services on its transportation, distribution, storage (downloading, selection), LNG installation services;

34) capacity distribution - provision, establishment of conditions and procedure for realization, and also implementation of other procedures connected with right to use by capacity of object of gas infrastructure;

35) distribution of natural gas - economic activity which is subject to licensing and connected with movement of natural gas by gas-distribution system for the purpose of its physical delivery to consumers, but does not include supply of natural gas;

36) certification - the accomplishment by the subject of managing of requirements about department and the independence of the operator of gas-transport system provided by this Law confirmed with the solution of the regulator;

37) the consumer - physical person, the physical person - the entrepreneur or the legal entity who receives natural gas based on the delivery agreement of natural gas for the purpose of use for own needs, but not for resale, or use as raw materials;

38) safety stock of natural gas (further - safety stock) - amount of natural gas which the supplier shall store in storages according to the legislation;

39) the subject of the natural gas market - the operator of gas-transport system, the operator of gas-distribution system, the operator of gas storage, the operator of the LNG installation, the customer, the wholesale seller, the wholesale buyer, the supplier, the consumer;

40) storage of natural gas (further - gas storage) - the technology complex created in natural or artificial reservoir for the purpose of accumulating of natural gas (including the reservoir of the LNG installation intended for storage of natural gas), and the constructions, technology integrated with this complex, intended for storage (downloading, selection) gas. For the purposes of this Law do not treat gas storage:

the reservoirs of the LNG installation intended only for production needs of such installation;

the reservoirs intended only for implementation by the operator of gas-transport system of the actions directed to fulfillment of requirements of integrity of gas-transport system taking into account that the reservoirs intended for provision of services of balancing by the operator of gas-transport system belong to gas storage for the purposes of this Law;

41) technical capacity - the maximum amount of capacity which right to use the operator of gas-transport system, the operator of gas-distribution system, the operator of gas storage or the operator of the LNG installation can provide to customers with the sales warranty of such right, taking into account requirements of integrity of gas-transport system and requirements for operation of gas-transport or gas-distribution system, gas storage or the LNG installation;

42) exit point - certain point in gas-transport system in which the operator of gas-transport system delivers the natural gas which is in gas-transport system in other gas-transport or gas-distribution system, gas storages, the LNG installations or the consumer attached to gas-transport system, or to the object connected with natural gas production;

43) point of entry - certain point in gas-transport system in which natural gas arrives in gas-transport system from the objects connected with natural gas production, gas storages, the LNG installations and also from other gas-transport or gas-distribution systems;

44) the cross-border gas pipeline - the trunk gas pipeline crossing the line of border between Ukraine and neighboring state and intended for connection of gas-transport systems of Ukraine with gas-transport systems of this state;

45) transportation of natural gas - economic activity which is subject to licensing and connected with movement of natural gas on gas-transport system for the purpose of its delivery in other gas-transport system, gas-distribution system, gas storages, the LNG installations or deliveries directly to consumers, but does not include movement by the intra industrial pipelines (attached by networks) and supply of natural gas;

46) installation of liquefied natural gas (further - the LNG installation) - the technology complex consisting of the terminal intended for the liquefaction of natural gas or loading, unloading and regasification of liquefied natural gas, and also the objects and constructions used for provision of support services and temporary storage in the course of regasification until delivery of natural gas to trunk gas pipelines, but not including parts of the terminal, used as gas storage;

47) integrity of gas-transport system - condition of gas-transport system in case of which pressure and physical and chemical indicators of natural gas remain in limits between the minimum and maximum levels determined by the operator of gas-transport system that technically guarantee transportation of natural gas.

Other terms are used in the values given in the laws of Ukraine "About oil and gas", "About pipeline transport" and other laws of Ukraine.

Article 2. Legal basis of the natural gas market

1. In obligation fulfillment of Ukraine under the Constitutive treaty of Energy Community and the Agreement on association between Ukraine, on the one hand, and the European Union, European Atomic Energy Community and their state members, on the other hand, this Law is directed to implementation of acts of the legislation of Energy Community in the field of power, namely: Directives 2009/73/EU on general rules of the domestic market of natural gas and on cancellation of the Directive 2003/55/EU; Regulations (EU) 715/2009 about conditions of access to networks of transportation of natural gas and which cancels Regulations (EU) 1775/2005; Directives 2004/67/EU on implementation of measures for safety of supply of natural gas.

The legal basis of the natural gas market the Constitution of Ukraine, this Law, the laws of Ukraine "About pipeline transport", "About natural monopolies", "About oil and gas", "About energy saving", "About production sharing agreements", "About protection of the economic competition", "About gas (methane) of coal fields", "About protection of the surrounding environment" constitute, the international agreements of Ukraine which consent to be bound is provided by the Verkhovna Rada of Ukraine, and other acts of the legislation of Ukraine.

2. Subjects of powers of authority, and also courts in case of application of regulations of this Law consider law-enforcement practice of Energy Community and the European Union, in particular the judgment of the European Union (European Court, General Court), practice of the European Commission and Secretariat of Energy Community on application of provisions of the acts of the European Union law specified in part one of this Article.

3. Decisions (actions) of subjects of powers of authority made in pursuance of regulations of this Law shall correspond to pro-rata rules, transparency and nondiscrimination.

According to pro-rata rule of the decision (action) of subjects of powers of authority shall be necessary and minimum sufficient for goal achievement of satisfaction of public interest.

According to the principle of transparency of the decision (action) of subjects of powers of authority shall be properly proved and reported to subjects which they concern, in the put time before entry into force or enforcement.

According to the principle of nondiscrimination of the decision, action, failure to act of the authorities cannot be given:

to legal or actual amount of the rights and obligations of person which is other than amount of the rights and obligations of other persons in similar situations if only such distinction is not necessary and minimum sufficient for satisfaction of public interest;

to legal or actual amount of the rights and obligations of person which is same as amount of the rights and obligations of other persons in unlike situations if such uniformity is not necessary and minimum sufficient for satisfaction of public interest.

Action of the principles specified in this part extends also to subjects of the natural gas market in the cases provided by this Law.

Section II Principles of functioning of the natural gas market. Role of the state in the natural gas market

Article 3. Principles of functioning of the natural gas market

1. The natural gas market functions on the principles of free fair competition, except activities of subjects of natural monopolies, and by the principles:

1) ensuring high level of protection of the rights and consumer interests of natural gas, including ensuring first-priority interest of safety of supply of natural gas, in particular by diversification of sources of natural gas;

2) free trade by natural gas and equalities of subjects of the natural gas market irrespective of the state according to which legislation they are created;

3) free choice of the supplier of natural gas;

4) equal rights on import and export of natural gas in/from the territory of Ukraine;

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