The Problems of Development of the Natural Gas Market in Ukraine on a Competitive Basis

Abstract

In the article the main parameters of functioning of the natural gas market in Ukraine are analyzed in the context of ensuring competitive relations between economic entities on it. It is revealed that the sphere of natural monopoly includes the markets of transportation, storage and distribution of natural gas; it is reasonable to consider the natural gas supply market as potentially competitive, because the supply of natural gas is provided by many suppliers as for industrial consumers and for the population. JSC «Ukrgazvydobuvannia» and NJSC «Naftogaz of Ukraine» with all entities related to it by control relations occupy a monopoly (dominant) position on the natural gas sales market directly from the producer. The trends of price changes in the retail natural gas market for household and non-household consumers have been investigated. The comparative analysis of domestic prices for natural gas and its delivery with the prices of European countries has been carried out, the structure of natural gas prices for households in Ukraine and EU countries is given. The key aspects of the development of the national retail and wholesale gas market are highlighted. The level of concentration in the wholesale natural gas market has been investigated using the Herfindahl-Hirschman index. It has been revealed that the level of concentration of its various segments may vary from low, which certifies the existence of a competitive environment, to high, which is inherent in a monopoly. This market is still at the stage of formation, the level of competitiveness is significantly differentiated by different suppliers. It should be noted that most gas consumers were not prepared for the introduction of the natural gas market, they did not have sufficient information about the rights guaranteed by the state and the opportunities provided by legislation. It has been found out that violations of competitive activity in the natural gas market are quite frequent and the main ones found by the Antimonopoly Committee of Ukraine have been considered. The main factors influencing the development of the competitive environment in the domestic natural gas market are given and the main problems of its formation are identified.