HomeMediaLatest NewsGazprom's loss revived the idea of reforming the domestic gas market

Gazprom's loss revived the idea of reforming the domestic gas market

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented on the possibilities of the domestic gas market effective monetization in Russia to the RBC Internet portal.

Gazprom (63%), NOVATEK (18%) and Rosneft (15%) are the main suppliers in the Unified Gas Supply System, Alexey Gromov said at the conference. The main social burden lies on Gazprom, which sells 90% of supplies to the population and utilities, he noted. The company accounts for less than 50% of gas supplies to high-margin and export-oriented industries (petrochemistry, metallurgy, production of building materials), the expert estimated.

Despite regular indexing, the profitability of gas supplies for Gazprom is not always positive, and prices in dollar terms due to fluctuations in the ruble exchange rate, in fact, "do not rise above $70 per 1 thousand cubic meters," Gromov notes.

"An attempt to reach a market price was made with the launch of natural gas trading at the St. Petersburg International Commodity Exchange in 2014. However, the volumes sold on the exchange remain low. In fact, gas producing companies sell only surplus gas on the stock exchange, which is not selected by their customers within the framework of existing direct bilateral contracts. In addition, the demand brought to the stock exchange also remains underestimated due to insufficient discipline of gas supply, high instability of gas supply on the stock exchange," the analyst explained.

Finally, another problem is the uneven tax burden on manufacturers, Gromov is sure. Such inequality arose as a result of Gazprom's export monopoly and was compensated for by lower taxes to independent gas producers, but now this scheme "does not correspond to the current realities of the market."
Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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