On 9 September, the Ministry of Finance of Ukraine officially published Order No. 380 dated 1 August 2024, which introduces significant changes to the regulation of customs clearance of biomethane by pipeline. From now on, Ukrainian biomethane producers will be able to export biomethane to the European Union via the Ukrainian gas transmission system through interstate interconnection points with four EU countries.
At the same time, biomethane producers do not have to connect their biomethane plants directly to the gas transmission system but can connect to gas distribution networks.
We previously published information on the adopted amendments required for the export of biomethane in our Energy Policy Pulse No. 23, namely, amendments to the Customs Code regarding customs clearance of biomethane. According to the adopted amendments, the terms and tariffs for connection, transportation, and export by the Ukrainian gas transmission system for biomethane producers are similar to those for natural gas producers but without the export restrictions that exist for natural gas.
How does this work in practice?
The Order establishes clear regulatory rules for two main customs stages: biomethane passage and release.
Passage (the customs authority's granting of a permit to the relevant person to move goods across the customs border of Ukraine, taking into account the declared purpose of such movement) allows the physical movement of biomethane across the border of Ukraine and refers to what is submitted to the customs for export.
Release - the completion of customs procedures for its free use in the domestic market or export, refers to the release into the export customs regime.
The passage of volumes of biomethane through the customs border of Ukraine will be carried out on the basis of:
- a periodic customs declaration
- a certificate of compliance with biomethane sustainability criteria
- documents confirming the connection of the producer to the gas transmission system (GTS) or gas distribution system (GDS)
- an act of acceptance and transfer of produced biomethane
- an act of the Ukrainian gas storage operator on the movement of natural gas and biomethane in gas storage facilities
The release of biomethane under the customs export regime is possible subject to the submission of:
- an additional declaration indicating the exact volumes of biomethane transported
- Proof of Sustainability of biomethane
- a general act of acceptance and transfer of natural gas signed by the operators of the gas transmission system of Ukraine and the partner country
- a certificate of the GTS operator on the accounting of commercial supplies and withdrawals of natural gas and a mixture of gases, biomethane of the customer
What does this mean for Ukraine?
We remind you that biomethane is a purified biogas that corresponds to natural gas in terms of its characteristics and can be used in the same areas as heating, electricity generation and transport fuel. Importantly, it can be integrated into the existing gas infrastructure without additional costs for new networks, making this resource not only profitable but also available for widespread use.
Ukraine's ability to export biomethane to the EU has several key advantages. With its vast agricultural resources, Ukraine is well-positioned to meet a significant portion of Europe's renewable energy demand through biomethane production. The Strategic Partnership established in February 2023 between Ukraine and the EU strengthens cooperation in the field of renewable gases, contributing to Ukraine's deeper integration into the EU energy market. It also contributes to sustainable economic development in rural areas by providing opportunities for sustainable income. In addition, biomethane can replace natural gas, strengthening Ukraine's and the EU's energy independence by reducing dependence on imports from Russia. Recent legislation clears the way for exports, with the first test transactions expected by September 2024.
By Yaroslav Petrov, Partner, and Marta Halabala, Counsel, Asters
