Naftogaz Set to Trade on Electronic Exchange

Ukraine’s state-owned industrial gas supply business Naftogaz Trading is preparing to buy and sell gas on the electronic platform Ukraine Energy Exchange following complex analysis of the system, it said May 29. 

This raises the transparency of market price formation and boosts the liquidity of exchange-based trade, it said. The exchange has been trading gas for over two years, with about 200 traders and private producers already active on it. However the volumes have been small, with most gas traded bilaterally.

It said it had studied the positive experience of Ukrgazvydobuvannya, its wholly-owned upstream subsidiary, and of Ukrtransnaft, which has been successfully trading oil products for "many years".

Exchange-based trading in a freely competitive market solves all the problems of pricing and improves the openness of its trading activity, it said. Its presence will boost liquidity as well.

Naftogaz is open to co-operation and invites all interested entities to become our counterparties in competitive trade, said gas head. Andrei Favorov.

Naftogaz Trading is already accredited for the exchange, and expects to do its first trades by the end of June. It is looking to trade balance of month and month-ahead. 

In 2017, 137.1mn m³ were traded and last year, just 154.2mn m³, while the industrial sector last year used almot 17bn m³.

“The entry of a major gas company with significant market share  is an important event, for the exchange. It could be the foundations stone for a truly competitive gas market. I think it will improve the creditbility of bids and offers…. It is no secret that Naftogaz’ prices are a key factor in setting the market direction, said exchange head Alexei Dubovsky.