"The issue of creating an internal gas market is overripe"

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, gave an interview to the Novye Izvestia Internet portal about the need to develop the domestic gas market in Russia.

— What will happen to investment projects now? Gasification, Power of Siberia-2, new LNG capacities?

— There are several components. Firstly, there are issues related to social gasification, in fact, a direct order from the president. It will continue to be implemented, and this is a serious burden for Gazprom. Gazprom will finance efforts not only to gasify the country, which has been happening for many years, but also to build the infrastructure of the "last mile", what is called bringing gas distribution systems to the final consumer.

— There is a minus in the Gazprom budget, and there is also a deficit in the country's budget. What kind of money should be used to build new facilities?

— These are strategic projects, which would be extremely painful to cancel or sequester for the implementation of the country's strategic goals. Another thing is that such disappointing financial performance of Gazprom may lead to a further resumption of discussions about the resumption of the domestic market.

This is a more important story. Gazprom has repeatedly complained, and this is close to the truth, that the efficiency of the domestic gas market is far from normal. Today, most consumers' gas is sold domestically at very low prices. Gazprom is trying to push through the government an outstripping increase in gas prices in order to somehow compensate for the loss of the European market.

— How much does Gazprom want to raise tariffs?

— Not on, but in. Twice as much. From 50% to 100% is Gazprom's minimum requirement in order for the company to reach an acceptable level of profitability within Russia. No one will do this, it can slow down economic growth and have a negative impact on the economy of many industrial enterprises and power supply facilities.

But given that we basically do not have an internal gas market as such, the situation is paradoxical in the sense that gas prices for end users are regulated by the state. This is not only for the population, but also for industrial enterprises and electric power facilities.

The issue of creating an internal gas market, where prices will be determined not by the state, but by the ratio of supply and demand, is overdue and overripe. And Gazprom's negative financial indicators should give an impetus to exactly such a development of events inside the country. If we continue to solve everything through a directive increase in gas prices set by the state, then this will again be patching holes in Trishkin's caftan.