On July 5, 2024, the Ukrainian Bar Association held the 4^th Energy Law Conference in Kyiv. As in previous years, the event brought together leading industry experts, representatives of regulatory authorities and specialized state institutions, as well as experts and leading specialists in the energy sector.

The event was opened by Mykola Stetsenko, UBA President, Managing Partner at AVELLUM. He noted that the Energy Law Conference is becoming more and more significant every year. Mr. Stetsenko noted that the energy sector of Ukraine is currently facing a large number of challenges — from a full-scale war to the EU integration process. These and other important issues were included in the Conference program and will be discussed by experts in the field, added the UBA President.

Also, as part of the event, the UBA signed a memorandum of cooperation with the Solar Energy Association of Ukraine. The document was signed by Mykola Stetsenko, UBA President, and Vladyslav Sokolovskyi, Managing Partner at Sokolovskyi and Partners, Chairman of the Board of the Solar Energy Association of Ukraine.

Mr. Sokolovskyi expressed hope that the cooperation of the two associations will benefit both lawyers and the solar energy industry.

The first session of the 4^th Energy Law Conference was entitled "Ukraine's Energy Strategy and Eurointegration". The panel was moderated by Ivan Bondarchuk, Partner at LCF Law Group, Head of Energy and Projects Practice, Chairman of the UBA Committee on Energy, Oil and Gas.

One of the main issues of the discussion was the impact of negotiations on Ukraine's accession to the EU on the energy industry. In particular, the participants of the discussion analyzed what was done during the year on the way to the European Union in this direction and what challenges must be overcome.

Oleksiy Orzhel, Head of Kyiv Office of the Energy Community, Minister of Energy and Environmental Protection of Ukraine in 2019-2020, noted that Ukraine should fully implement EU energy legislation and fulfill the tasks clearly and according to the deadline.

Another important issue in the focus of the discussion was ways to ensure energy independence, increase production, decentralization of energy capacities and renewable energy sources against the background of the ongoing full-scale war.

Roman Andarak, Deputy Minister of Energy of Ukraine for Digital Development, Digital Transformation, and Digitalization, emphasized that now all the state's efforts are focused on preparing the energy industry for the coming winter. In his opinion, given the conditions of a full-scale war and general changes in the state's energy sector, Ukraine's energy strategies — for example, for 2025 or 2030 — will definitely need to be revised.

Mr. Andarak also spoke about the government's work on the implementation of the Fourth EU Energy Package and the National Energy and Climate Plan of Ukraine 2025-2030.

Andriy Gerus, Chairman of the Committee on Energy, Housing and Utilities of the Verkhovna Rada of Ukraine, noted that the state now faces the task of maximally promoting the development of distributed electricity generation. In addition, the parliamentarian spoke about decisions that simplify connection to electricity and gas networks.

Mr. Gerus also said that the MPs are investigating whether any further legislative changes are needed to launch renewable energy auctions. According to information from the Ministry of Energy, these auctions are planned to be held this year, the parliamentarian added.

Yuriy Kamelchuk, Member of Parliament of Ukraine, noted that the main challenge now is the issue of fossil energy production. According to him, by the end of this year, up to 8 TPP units with a capacity of 200-300 MW each are expected to be launched. Also, several NPP units will be put into operation after planned repairs. In view of this, Mr. Kamelchuk expressed cautious hopes that the winter for Ukraine will not be as difficult as is currently forecast.

Olga Babiy, Member of the National Energy and Utilities Regulatory Commission (NEURC), outlined five challenges currently facing the energy sector of Ukraine:

• destruction of maneuvering capacities;
• electricity deficit, which will need to be regulated;
• the beginning of negotiations on Ukraine's accession to the EU;
• issues related to Ukraine Facility financial support program, which includes a number of issues related to electricity and gas markets that require attention;
• the National Energy and Climate Plan approved by the Cabinet of Ministers of Ukraine.

Ms. Babiy also touched on the issues of debt settlement and the implementation of the REMIT (a set of European rules and practices aimed at preventing abuses in wholesale energy markets and providing for liability for manipulation of participants in these markets).

After the first session, Olga Babiy was interviewed by Olga Savchenko, Partner at Altelaw. In particular, Mrs. Babiy expressed her hope that by September 2024 the NEURC will be fully staffed and will respond to the challenges of the upcoming heating season of 2024-2025 already in full. Currently, the Commission, which, according to the law, should consist of seven people, works with four members, the election of two more is expected in the near future.

Also, during the interview, issues related to the REMIT and escrow accounts were raised. In addition, Olga Babiy answered the questions of the Conference participants.

The second session of the Conference was devoted to the functioning of the electricity market. The moderator of the discussion was Vladyslav Sokolovskyi, Managing Partner at Sokolovskyi and Partners, Chairman of the Board of the Solar Energy Association of Ukraine.

Daniil Petrenko, Deputy General Director for Development of Market Operator JSC, delivered a report "Electricity market coupling". According to him, the purpose of unification of markets is:

• increasing liquidity on the market;
• equalization of prices;
• optimal use of the capacity of interstate crossings.

Mr. Petrenko explained in detail how market coupling arose and explained how it works.

Оleksii Zakharchuk, Director of Legal and Regulatory Affairs at DTEK, discussed the problematic issues of launching REMIT in Ukraine. According to him, such problematic issues are:

• lack of opportunity for market participants to familiarize themselves with the materials of the investigation during its conduct — only after receiving a conclusion on the results of the investigation;
• lack of rights of business entities at the stage of preliminary research (reading materials, submitting objections to the results of preliminary research, etc.);
• lack of opportunity for business entities to independently involve experts in the investigation process — only petition before the NEURC;
• wide discretion of the regulator to increase fines at its own discretion, without taking into account the method of determining fines, without clear and exclusive criteria;
• no exceptions at the statutory level for the REMIT rules from the general rule on the maximum amount of the penalty, which cannot exceed the amount of the fine imposed by the relevant decision of the regulator, etc.

Olga Yeriomina, Associate Director, Senior Banker in the Energy Department of the European Bank for Reconstruction and Development, spoke about the EBRD's projects in electricity during the full-scale war. In particular, she noted that with the involvement of the Netherlands, NEC "Ukrenergo" was granted loans for 670 million EUR. Also, at the beginning of 2024, an agreement was signed with Italy on a 200 million EUR loan for Ukrhydroenergo.

According to Ms. Yeriomina, the EBRD is also developing cooperation with renewable energy producers, such as Galnaftogaz.

Andriy Konechenkov, Chairman of the Board of the Ukrainian Wind Energy Association (UWEA), spoke about the state of the wind energy sector in Ukraine. He emphasized that the provision of the opportunity for producers of electricity from wind energy to leave the balancing group of the “Guaranteed Buyer” state enterprise to the free market with the possibility of returning back without losing the "green" tariff or support based on the results of the auction was the most progressive political decision of 2023, which corresponds to the European market practice.

Mr. Konechenkov also outlined the potential of onshore and offshore wind energy in Ukraine and the short-term prospects for the development of wind energy in our country.

Maksym Yurkov, Director of Legal Affairs at Ukrenergo NEC, told the participants of the Conference about judicial practice in disputes regarding settlements on the market.

Oleksandr Martyniuk, Chief Renewable Energy Expert, USAID Energy Security Project (ESP), and Yuriy Boyko, Advisor to the Prime Minister of Ukraine, also took part in the discussion.

The gas market and industry extraction issues were the topic of the third, final session of the Conference. The co-moderators of the panel were Olga Terefenko, Partner at GRAVITY, and Serhii Datsiv, Senior Associate in the Energy Practice at INTEGRITES.

Georgii Geletukha, Chairman of the Board of the Bioenergy Association of Ukraine (UABIO), spoke about the prospects of biomethane production in Ukraine. He introduced the audience to the potential of biogas/biomethane production in our country, basic national legislation in this area, existing biomethane plants and projects planned for launch, GR activities of the Bioenergy Association of Ukraine, etc.

Yuliia Borzhemska, Regulatory Policy Manager at DTEK Naftogaz, made a speech "Issues of implementation of agreements on the distribution of hydrocarbons." In particular, she proposed the following measures to resolve problematic issues in this area:

1. Adopting the Procedure for the management accounting of property.
2. Adopting the Procedure for the sale of liquid hydrocarbons.
3. Making a decision with the authorized legal entity regarding liquid hydrocarbons.
4. Providing a clear algorithm for the interaction of the state authorized body (SAB) with investors and the introduction of changes to production sharing agreements (PSA).
5. Developing a mechanism for the involvement of the SAB and other state bodies for the effective PSA administration.

Artem Petrenko, Executive Director of the Association of Gas Producers of Ukraine, gave a speech "Investments in oil and gas production during the war: risks or opportunities?". He spoke about the current state of the industry in Ukraine, including the following figures:

• almost 300 new gas wells were planted in Ukraine during the full-scale war;
• 150 wells in 2023 — a record number over the past six years;
• the average number of working drilling rigs in Ukraine in January-May 2024 is 46.

Mr. Petrenko also paid attention to the draft law on stimulating the development of the oil and gas industry No. 4344, which is currently in the final stage of preparation for the second reading in the Ukrainian parliament. According to the expert, this document improves the procedure for conducting tenders for the conclusion of agreements on the distribution of products, as well as the process of signing and implementing the PSA, its adoption will contribute to attracting investments into the Ukrainian economy for the country's post-war recovery. The parliament is expected to pass this law this year.

Andrii Moskalyk, Partner at Baker McKenzie Ukraine B.V., touched on the issue of foreign investment in the oil and gas industry of Ukraine during the full-scale war, in particular with the help of the PSA model. According to him, the trends show that investors have not lost interest in Ukraine and the industry, but this interest currently remains mostly deferred, especially in relation to plots in the East. Therefore, according to Mr. Moskalyk, the implementation of large-scale investment programs can be observed later, after the end of martial law and the cancellation of a number of NBU restrictions on capital movement.

Denys Kudin, Executive Vice President for corporate strategy and development at PJSC "Ukrnafta", and Roman Nitsovych, Director of research at DiXi Group, also took part in the discussion.

You can view the photo report from the event at the link.

Special thanks for the support in organizing the 4^th Energy Law Conference is given to:

• Partners: Altelaw, DTEK, LCF Law Group, Sokolovskyi and Partners;
• Session Partner — GRAVITY;
• Socially Responsible Partner — INTEGRITES.