NESF / Analytics : Fuel & Energy : 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

Domestic Market of Energy Resources: Current State and Future Prospects

Power industry without RAO UES

New system of government regulation in the industry

System of pricing for gas and electricity

Gazprom strategy in the power industry

A medium-term forecast of developments

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