2016 and beyond Ukrtransgaz

TSO strategic role in gas market development Provide transparent, non-discriminatory access to the infrastructure (GTS/UGS) Facilitate cross-border trade to ensure diversification and security of supply Offer services that meet clients’ needs Minimize risk of the system and counterparty risk management Facilitate trade

Gas market reform (2014-2015) New legislation New infrastructure Gas Market Law 3EP secondary legislation Capacity allocation (daily, monthly, quarterly, yearly) Firm Interruptible RF Balancing Interoperability and data exchange Entry-Exit system with VTP and RAB-based tariffs New corridors to SK, PL, HU Increased capacities from SK

Diversification and security of supply Eliminating critical dependence on a single supplier 2014 2015 RU EU Russia’s share (2014 to 2015) in gas imports: 74% to 37% in consumption: 34% to 18%

Diversification and security of supply Passed our first winter without purchasing gas from Russia

Plans for 2016 to support market development Offer OBA and reverse flows (including backhaul) at IPs with Slovakia, Hungary, Poland and Romania Further harmonization of secondary legislation and business rules with EU norms Implementation of a new IT solution to automate nomination/allocation processes and introduce daily balancing Offer new services to facilitate development of VTP and gas trade (OTC/Exchange) Unbundling, TSO certification Transparency requirements (715/2009, REMIT)

www.utg.ua/live

Future of the market

Ukraine West integration corridor

Trading region Description The trading region consists of two or more neighboring gas markets that establish a cross-border balancing zone with a single (joint) VTP, covering all transmission systems but maintain national end user balancing systems. The main characteristics are: an integrated balancing zone and entry-exit system including only transmission systems (cross-border trading zone), separated national balancing zones for end user loads (end user zones), end user managers which are in charge of physically balancing end user zones, harmonized obligations for suppliers (e.g. licenses, minimum storage requirements, etc.). The concept can be implemented fairly quickly because no cross-border alignment of end user balancing rules (and potentially also the underlying metering and allocation rules) is required. Since end user balancing systems are not merged between gas markets, related synergies are left untapped (that could be tapped using the market merger concept).

Thank you!