The actual sale price of natural gas, which is used to calculate the royalty for natural gas production in Ukraine, stood at 12,738 hryvni per 1,000 cubic meters in January 2024, 6.3% lower than in December 2023 when it was 13,595 hryvni per 1,000 cubic meters, Ukrainian media said, citing the Economy Ministry.
Under Ukraine's law that changed the calculation of the royalty for subsurface resource use for natural gas production, the royalty will be calculated based on the highest of three internal sale prices from August 1, 2022 and until the ban on gas exports from Ukraine is fully lifted.
Naftogaz of Ukraine and its subsidiaries did not conclude contracts on the purchase and sale of gas in December (for January) after buying gas extracted in Ukraine on organized commodity markets (the Ukrainian Energy Exchange, the Ukrainian Universal Exchange and the Ukrainian Interbank Currency Exchange),
The average price based on the UA VTP Gas price (the average arithmetic value between the Bid and Ask prices in reports of Argus European Natural Gas and ICIS European Spot Gas Market) stood at 12,738 hryvni per 1,000 cubic meters, becoming the actual sale price in January.
As reported, before the aforementioned law was passed, the actual sale price of gas was calculated as the arithmetic average of the customs value of imports and prices on the TTF gas hub in the Netherlands.
The tax legislation review in the summer of 2022 was prompted by a considerable rise in spot prices seen in Europe at the time, a ban on Ukrainian gas exports and lower consumption inside the country. That situation made gas production unprofitable for a large number of companies, because the sale price in Ukraine was far lower than in Europe.
Until March 2022, the royalty was calculated only based on the customs value of imports. (February 8, 2024)
UKRAINE - Natural Gas - PRICE