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Gazprom on Path to New Reality

Gazprom on Path to New Reality

Many saw the beginning of Vladimir Putin’s new presidential term as a window of opportunity for passing big decisions on restructuring of the gas market. The formation of a new government and media attacks on the Gazprom management were aimed at putting on the political agenda the issue of liberalisation of gas export and divestment of gas pipelines.

The beginning of export from, and accelerated commissioning of the capacities of, the Yamal LNG project and growth in the capitalisation of Novatek triggered a new phase of the fight for Gazprom’s export revenue and production assets. Especially considering that the resources available to the independent producers themselves prevent them even from maintaining gas production within reach of the Unified Gas Supply System, not to mention intensive expansion.

However, radical views on the development of the gas industry are countered by the need to ensure trouble-free gas supply to households and the national economy; Gazprom’s successes in export; and the carrying out of major infrastructure projects from the Baltic Sea to the Black Sea to the Sea of Okhotsk. So the fight continues.

Read about these and other processes in the new NESF report.

The report contains the following sections:

  • Gazprom in the domestic gas market

    • What the ratio between Gazprom and the independents looks like
    • Supply dynamics and change of the Gazprom share
  • Export to Europe: towards a new record

    • It is already obvious that supply to Europe will reach a new all-time high. However, competition is on the rise too. The entire year Europe has discussed the arrival of American LNG and celebrated the completion of the TANAP gas pipeline
  • The problem of Ukraine 2019: is a new transit war possible?

    • This problem will have to be solved in conditions of fierce political fighting in Ukraine itself; increasing pressure of sanctions imposed by the US and UK; and international arbitration.
  • Gazprom’s financial position

    • An investment boom in an era of sanctions
  • A medium-term forecast of developments

Contents of the report:

Introduction 3
Chapter 1. Gazprom in Domestic Gas Market: Independents Slow Down 4
1.1 Gas production within reach of the UGSS: a Gazprom comeback 4
1.2 Is the fight for the domestic market over? 9
1.3 Gazprom’s pricing and incomes of in the domestic market 12
1.4 Exchange trade in gas in Russia 13
Chapter 2. Gas Export by Pipeline: Peak in Europe, Decline in Turkey 17
2.1 Gazprom in the European Union markets: towards new records 18
2.2 Gazprom in the Turkish market: turbulence as the strategic position is consolidated 24
2.3 Gazprom in the former Soviet Union 27
Chapter 3. The problem of Ukraine 2019: is a new transit war possible 34
3.1 Stockholm arbitration decisions on the gas contracts and their implications 34
3.2 Ukrainian transit after 2020 37
Chapter 4. Gazprom’s Eastern Projects: Growth of Power of Siberia 43
4.1 China’s gas hunger 43
4.2 Prospects for developing supply of Russian pipeline gas to China 46
Chapter 5. Gazprom’s Financial Position: Investment Boom in Era of Sanctions 51
5.1. Accelerated income growth 51
5.2. Gazprom’s capital investment and investment programme for 2016 and 2017 53
5.3. Gearing rises but remains reasonable 56
Chapter 6. Medium-term Forecast of Developments 58
Date of release: December 30, 2018

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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