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Domestic Market of Energy Resources: Current State and Future Prospects

Domestic Market of Energy Resources: Current State and Future Prospects

The new government with Vladimir Putin at the helm has proved unprepared for the liquidation of RAO UES of Russia. It turns out, as the assets of the holding company have been distributed, that there is no scheme for regulating the industry. Furthermore, the very concept of the operation of the power industry is currently a heap of controversies resulting from years of bureaucratic procedures and unceasing political compromises.

The government has found itself pressed for time on the threshold of the upcoming heating season and the need for building a new regulatory system virtually from scratch and on the fly. All this coincides with rapid growth in gas prices and the liberalisation of the electric power market. The probability of deficit of these resources in the national economy in the near future adds to that.

The Report offers an in-depth discussion of the following subjects

  • Power industry without RAO UES

    • Interim industry reform outcomes
    • Sale of generation and its beneficiaries
    • System faults and the outcomes of the redistribution of assets
  • New system of government regulation in the industry

    • Those in charge of the power industry
    • The role of the Energy Ministry
  • System of pricing for gas and electricity

    • Exchange trade
    • Long-term contracts
    • Gas supply and demand issues
    • Fuel market and difficulties providing power plants with energy resources
    • Programme for positioning power industry facilities
  • Gazprom strategy in the power industry

    • Integration of assets having been acquired and failure of the SUEK takeover deal
  • A medium-term forecast of developments

The contents of the report:

Introduction 2
Chapter 1. Power Industry without RAO UES of Russia 3
1.1. New Reality in Power Industry 3
1.2. System of Control over Gazprom: Interchanging the Interchangeable and the Sechin Factor 8
Chapter 2. Gas Supply in Russia in View of Growing Consumption: Challenges and Risks 13
2.1. Gas Deficit and Gas Balance to 2020 14
2.2. Monopoly’s Investment «Bubble» and Financial Crisis 20
2.3. Priority to Domestic Supplies 28
Chapter 3. Demand and Pricing for Gas and Electricity. Problems of Exchange Trade in Gas 32
3.1. Programme for Placing Power Industry Facilities; «Political Forecasting» of Demand for Gas and Electricity 32
3.2. Long-term Contracts with Gazprom. Liberalisation of Gas and Electricity Prices 35
3.3. Experiment with Sale of Gas on Electronic Floor. Prospects for Gas Exchange in St Petersburg 39
Chapter 4. Gazprom Strategy in Power Industry. Integration of Assets Having Been Acquired and Failure of SUEK Takeover Deal 42
Chapter 5. Key Conclusions and Forecasts 49
Date of issue December 1, 2008

If you are interested to obtain please contact » Elena Kim

Other issues:
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Analytical series “The Fuel and Energy Complex of Russia”:

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Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
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The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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