Actual gas selling price in Ukraine falls 4.6% in March

MOSCOW. April 9 (Interfax) - The actual selling price of natural gas, from which the rent payment for its extraction in Ukraine is calculated, stood at UAH 11,621.27 per 1,000 cubic meters in March 2024, which is 4.6% less than in February (UAH 12,180.3 per 1,000 cubic meters), Ukrainian media reported, citing the Economy Ministry's website.

In accordance with the law on changing the formula for calculating the rent for subsoil use for natural gas production, the rent is calculated based on the maximum selling price out of three such domestic prices from August 1, 2022 and until the ban on Ukrainian gas exports is completely lifted.

Naftogaz Ukraine and its subsidiaries did not conclude gas purchase and sale contracts in February (as of March) based on the results of purchasing Ukrainian-produced gas on organized commodity markets (the Ukrainian Energy Exchange, the Ukrainian Universal Exchange, and the Ukrainian Interbank Currency Exchange).

The average price based on UA VTP Gas price (arithmetic mean between Bid and Ask prices in the reports of Argus European Natural Gas and ICIS European Spot Gas Market) is UAH 11,621.27 per 1,000 cubic meters, which became the actual selling price.

As reported, before the law was adopted, the actual gas selling price was calculated as the arithmetic mean of the customs value of imports and quotations at the Dutch gas hub TTF.

The review of the tax legislation in the summer of 2022 was due to a marked increase in spot prices in Europe at that time, a ban on exports of Ukrainian gas and a drop in domestic consumption. This resulted in production becoming loss-making for many companies, as the selling price in Ukraine is much lower than European prices.

The gas rent was calculated only based on the customs value of imports before March 2022.