Energy regulator plans three-phase increase in crude oil pipelines' tariffs

The National Commission for Energy, Housing and Utilities Services Regulation (NCER) at a meeting on Friday approved a draft resolution on the three-phase increase of tariffs for pumping crude oil through pipelines of JSC Ukrtransnafta to the country's oil refineries.

The tariffs are planned to be increased due to a change in the methodology of their formation, avoiding subsidizing domestic tariffs due to transit tariffs, reducing the number of transportation routes from 18 to six, as well as the expected increase in transportation volumes to the Kremenchuk oil refinery.

The commission predicts the transportation of oil by Ukrtransnafta to the Ukrainian refineries in 2019 in the amount of 2.228 million tonnes, which is 12.9% more than in 2018.

According to Head of the commission Oksana Kryvenko, the increase in oil pipelines' tariffs will affect the margin of oil suppliers and processors, but will not affect the cost of oil products for end consumers in connection with the formation of domestic fuel prices based on import parity.

Five of the six routes relate to the Kremenchuk oil refinery (Ukrtatnafta), and one more relates to the Galychyna refinery. If the tariffs are approved, the cost of transportation to the Kremenchuk refinery in two years, depending on the route, will increase 1.9-3.5 times, and to the Galychyna refinery – 1.6 times.

The draft decision is pending public discussion.