Inspections in energy markets and subsoil use
On the eve of the new year, the state supervisory (control) authorities approved their inspection plans for 2025. This review provides information on the regulator’s inspections of the electricity and natural gas markets, as well as inspections of subsoil users by the State Service of Geology and Subsoil of Ukraine.
Scheduled inspections are carried out by annual plans approved by the state supervisory (control) authority no later than 1 December of the year preceding the scheduled inspection.
Since mid-March 2022, the Government has suspended scheduled and unscheduled state supervision (control) measures during martial law, with certain exceptions, including inspections by the National Energy and Utilities Regulatory Commission (NEURC).
On 18 November 2024, the NEURC published the Plan of State Control Measures for Business Entities Operating in the Energy and Utilities Sectors for 2025, according to which 207 business entities are subject to inspection next year.
The Law of Ukraine “On the National Energy and Utilities Regulatory Commission” sets out the specifics of state control in the energy and utilities markets. The NEURC’s inspection procedure is regulated by the Procedure for Monitoring Compliance by Licensees Operating in the Energy and Utilities Sectors with the Law in the Relevant Areas and Licence Conditions.
Also, the order of the State Service of Geology and Subsoil of Ukraine (Geonadra) approved the Annual Plan for implementing state supervision (control) measures by the State Service of Geology and Subsoil of Ukraine for 2025. In total, the Annual Plan includes 717 business entities.
The Geonadra’s intentions to conduct inspections are also reflected in the Plan for Implementing Comprehensive State Supervision (Control) Measures of State Supervision (Control) Authorities for 2025. As stated on the website of the State Regulatory Service of Ukraine, the Government does not restrict the intentions of the planning activities.
At the same time, inspections by the Geonadra are not included in the list of exceptions provided by the Government. Thus, while the scheduled and unscheduled state supervision (control) measures for the period of martial law have been suspended, the Geonadra may only carry out unscheduled measures in the presence of a threat that has a negative impact on the rights, legitimate interests, human life and health, environmental protection and security of the state, as well as to fulfil Ukraine’s international obligations.
The Regulation on the Geonadra gives this state body the power to conduct scheduled and unscheduled inspections of subsoil users.
In addition, on 5 December 2024, the website of the Ministry of Energy of Ukraine published a draft resolution of the Government “On Conducting a Comprehensive Inspection of the Fulfilment of the Conditions Stipulated by the Production Sharing Agreement”’ (hereinafter – the Draft Resolution).
The Draft Resolution provides for the approval of:
- the procedure for conducting due diligence of compliance with the terms and conditions stipulated in a production sharing agreement (PSA);
- the form of the report on the due diligence of the PSA;
- an exemplary list of questions for conducting a comprehensive due diligence of compliance with the PSA.
According to the draft Resolution, a comprehensive inspection is carried out at least once every five years based on a government act. The inspection is headed by the Ministry of Economy (for mineral sites other than oil and gas subsoil), the Ministry of Energy (for oil and gas subsoil sites), or the State Service of Geology and Subsoil (as the authorised body for implementing PSAs).
As stated in the explanatory note, the inspection procedure will apply to 13 hydrocarbon sharing agreements to be produced within the Sofiivska, Uhnivska, Balakliiska, Ivanivska, Zinkivska, Buzivska, Berestianska, Varvynska, Okhtyrska, Hrunivska, Ichnianska, Yuzivska and Oleska fields.
Comments and suggestions on the draft Resolution can be sent to the Ministry of Energy until 4 January 2025.
If you would like to discuss the issues raised in this paper in more detail, please contact the SK team.
Information contained in this legal alert is for general informational purposes only, does not constitute legal or other professional advice and should not be relied upon as a substitute for specific professional advice adapted to the specific circumstances.
