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Gazprom: the life in the epoch of sanctions, the turn towards the East, growing domestic competition

Gazprom: the life in the epoch of sanctions, the turn towards the East, growing domestic competition

Gazprom has found itself under double pressure. On one side, it is becoming more complicated for Gazprom to deal with the EU that strongly perceives the Russian company as an instrument of political pressure by Russia.

On the other side, the gas giant is attacked on the domestic market by large independent gas producers that are suffering from sanctions and count on expansion of their share on the domestic market as compensation. Besides, the period of low prices of hydrocarbons continues on the world market.

Yet, as the saying goes, every cloud has a silver lining. The political situation is assisting Gazprom in some way – at least, the question of the concern’s restructuring is not that acute on the agenda. Vladimir Putin is not ready to begin serious reforms in such complicated political and economic conditions. Yet, Gazprom still has to solve important tasks, e.g. to quickly reorient towards China, expand the domestic demand and find investments amid its limited access to credit markets.

The report elaborates on the following issues:

  • Development of the domestic natural gas market

    • A new campaign against Gazprom by independent gas producers, outcomes
    • Weak consumption on the background of excessive production capacities
    • Pricing system: problems and prospects
    • Results of the first year of natural gas trade on the exchange
  • Gazprom on the European market

    • Demand for Russian natural gas in Europe and Turkey
    • Antimonopoly investigation by the European Commission, prospects
  • Gas transit difficulties, new gas transportation projects

    • European triangle: Nord Stream-2, Turkish Stream and Ukraine’s GTS
    • Stability of transit via Ukraine
    • New winter package: Ukraine is entering a new heating season
  • Gas turn towards Asia

    • Power of Siberia: transfer to construction stage
    • Negotiations on expansion of gas supplies to China
    • LNG in the Far East
  • Finances of Gazprom amid sanctions

    • The company’s investment program
    • Fiscal appetite of the state
  • Reforms in Gazprom’s corporate structure

  • Medium-term forecast of developments

Contents of the report:

INTRODUCTION 4
Chapter 1. DOMESTIC GAS MARKET: COMPETITION ON THE RISE, UNLIKE CONSUMPTION 5
1.1. Situation on the domestic market: weak consumption amid excessive production capacities 5
1.2. Pricing system, gas supplies to the market: regulatory zugzwang 13
1.3. Outcomes of the first year of gas exchange trade 17
1.4. New campaign on restructuring Gazprom 19
1.5. Natural gas motor fuel as new driver of Russia’s gas market 20
Chapter 2. GAZPROM AND UKRAINE: RISKS OF RADICALIZATION OF THE SITUATION 23
2.1. Gas balance of Ukraine on the threshold of winter 23
2.2. New winter package agreement 26
2.3. Natural gas transit through Ukraine 29
Chapter 3. GAZPROM IN EXTERNAL MARKETS 32
3.1. Standing of Gazprom on the EU market 32
3.2. Gazprom supplies to European markets 35
3.3. Situation on the Turkish market, supplies by Gazprom 38
3.4. Gas transportation triangle: Nord Stream-2, Turkish Stream, Ukraine’s GTS 41
3.5. Antimonopoly investigation of the European Commission, concept of the Energy Union 43
3.6. Diversification strategy: Eastern vector of Gazprom and LNG 47
Chapter 4. GAZPROM FINANCES, STAFF RESHUFFLE 52
4.1. Financial standing of Gazprom 52
4.2. Investment program 54
4.3. Debt burden of Gazprom 57
4.4. Fiscal appetite of the state 58
4.5. Personnel reshuffle at Gazprom 60
Chapter 5. MEDIUM-TERM FORECAST OF DEVELOPMENTS 63
5.1. Domestic market 63
5.2. Ukraine 64
5.3. Export markets 64
5.4. Financial standing 65
Date of release: December 28, 2015

If you are interested to obtain please contact » Elena Kim

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

New OPEC+ Deal and Future of Oil Business in Russia
Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
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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