Ukrainian Economy Ministry calculates actual sale price of gas in August and September

MOSCOW. Oct 20 (Interfax) - The actual price of natural gas that is used to calculate the rent rate for gas production in Ukraine stood at 24,450 hryvni per 1,000 cubic meters in August, and at 39,952 hryvni per 1,000 cubic meters in September, Ukrainian media said on Wednesday, citing the Ukrainian Economy Ministry.

In accordance with the law on amending the procedure for calculating the rent rate for the use of subsoil reserves to produce natural gas, the rent rate shall be calculated based on the highest of the country's three domestic sale prices starting from August 1, 2022 and until the ban on Ukrainian gas exports is lifted entirely.

In July and August, Naftogaz of Ukraine did not sign any purchase-sale contracts for gas of its own production on organized commodity markets, which is why the rent rate was calculated based on the price of gas sold on the organized commodity markets without Naftogaz of Ukraine and its subsidiaries, as well as based on the average UA VTP gas price (an average arithmetic quotation between Bid and Ask prices in Argus European Natural Gas and ICIS European Spot Gas Market reports) for the following months and on a pre-paid basis.

As reported, before the aforementioned law was adopted, the actual price of gas was calculated as an average arithmetic equation between the customs cost of imports and prices at the TTF Dutch natural gas hub.

The review of Ukraine's customs legislation is due to a considerable rise in spot prices in Europe, the ban on Ukrainian gas exports and the reduction of consumption inside the country, the circumstances that have made gas production commercially unfeasible for a large number of companies, as the price at which gas is sold inside Ukraine is much lower than such prices in Europe.

Before March 2022, the gas rent rate was calculated based only on the customs cost of imports.