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Monday, August 25, 2008

Gazprom under pressure to share

14 August, 2008 - Upstream OnLine - Russia's anti-monopoly agency is proposing to change legislation on gas exports that would force gas monopoly Gazprom to share export pipelines with independent producers, a ccording to reports. Vedomosti business daily quoted sources as saying the amendments had been supported by influential Deputy Prime Minister Igor Sechin, the economy ministry and the customs services while the energy ministry is against them. Under the proposal, Gazprom would retain its export monopoly status but would have to buy gas for exports from independent producers on a pro-rata basis to their production. Independent gas producers such as Novatek and oil players producing gas such as Lukoil have long been fighting to get access to lucrative export markets where gas often sells at prices five times higher than at home, a Reuters report said. Russia has promised to free domestic gas prices by 2011, which would boost the attractiveness of domestic sales. "We do not believe at this point that the bill has a realistic chance of being passed, as Gazprom is likely to fight tooth and nail against the proposal," Troika Dialog said in a note to investors. It also said that if the bill were passed Gazprom would force independent producers to fund maintenance and expansion of its pipelines to recoup losses on exports. Renaissance Capital said it estimated that in 2007 total non-Gazprom gas production stood at 104 billion cubic metres or 15.9% of Russia's total with Gazprom buying only 20 Bcm from third parties in Russia. "If amendments are approved, independent producers would enjoy higher sales prices and would have an incentive to increase gas production in mid-term as opposed to waiting for the liberalisation of domestic gas prices scheduled for 2011, which may even be delayed," it said.

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