Gazprom: Goliath is not going to surrender

Contradictions between major players on the Russian gas market keep accumulating. Depressed demand on the market and increased supply by independent producers restrict gas output of Gazprom and sharpen competition for financially reliable consumers creating the ground for new intrigues around configuration of the sector.

The situation on foreign markets is positive. Russian gas exports to the European Union keep growing. The increased demand for gas imports, concerns about reliability of transit via Ukraine, and mutual tiredness of sanction policies form the background for settlement of gas disputes and for development of constructive cooperation on new projects.

The Asian direction is not left unattended. Decline in revenues from domestic supplies, due to redistribution of the profit margin and departure of premium clients to independent producers, and from exports over low prices of hydrocarbons create problems for Gazprom’s financial standing. Growth in the tax burden on Gazprom contributes to these problems. Nevertheless, a comfortable level of debts and access to Western and Asian markets of capital, coupled with optimization of expenses on gas purchases and investments, enable Gazprom to hold its ground even in current conditions.

This report by the NESF analyzes the current standing of Gazprom.

The report elaborates on the following issues:

• Gazprom is surrounded by independent producers: the situation on the domestic gas market

  • The situation regarding supply and pricing
  • Development of exchange trade
  • New proposals by independent producers on gas sector restructuring, Gazprom’s counterattack

• Gazprom on foreign markets

  • New leap into Europe: How long will it last?
  • The problem of transit via Ukraine, the fate of new pipeline projects
  • The Turkish saga

• Financial and economic standing of Gazprom

  • Taxation of Gazprom
  • Dynamics of revenues and expenses
  • Investment policies
  • Debt burden

• The medium-term forecast of developments

  • What will happen to restructuring on the domestic market?
  • What awaits Gazprom on foreign markets?

Contents of the report: