| How to create a domestic gas market in Russia In search of opportunities to increase economic growth, Russian authorities have turned their attention to the gas industry. The point is not only that experts and investors in Russia and abroad unanimously say that the absence of a gas market is hindering economic development. This idea has already become an axiom for the Russian elite. The concept of gas market development, which specialists from the Ministry of Economic Development and the Ministry of Energy have been working on for a long time, is receiving more and more specific design. Head of Government Mikhail Kasyanov, speaking recently at the Federation Council, said that the creation of a domestic gas market in Russia should become a priority for the near future. He also noted that it is necessary to create incentives to encourage gas producers to sell it on the domestic Russian market. Not only officials, but also the gas workers themselves will have to work on implementing the task set by the Prime Minister.
Confirmation that the reform of the gas industry has moved forward is the activation of various stakeholders in the process of developing the “rules of the game.” All gas workers - both independent producers and Gazprom - welcomed the creation of the Russian Gas Vertical Parliamentary Association in May. In essence, this lobbying organization is designed to ensure that the interests of all market participants are taken into account when developing a new legislative framework for the activities of gas industry enterprises. And although the association was called “vertical”, in terms of the structure of its representation it is quite “horizontal” in nature, since it equally intends to listen to the opinions of the federal authorities, the regions, Gazprom, independent producers, and investors.
The level of problems facing various branches of government and the gas workers themselves today has evened out political differences between legislators. This is evidenced by the composition of the initiative group for the creation of “Vertical”. It included not only the heads of a number of regions, including the main gas producing ones (Governor of the Yamalo-Nenets Autonomous Okrug Yuri Neelov, Governor of the Tyumen Region Sergei Sobyanin, Head of the Khanty-Mansiysk Autonomous Okrug Alexander Filipenko, Head of the Administration of the Arkhangelsk Region Anatoly Efremov, Chairman of the Government of Karelia Sergei Katanandov) , and a number of members of the Federation Council, but also State Duma deputies from Unity and OVR, Regions of Russia, People's Deputy, Union of Right Forces, Communist Party of the Russian Federation, LDPR, Yabloko and the Agro-Industrial Group.
The association's organizers are confident that there are huge reserves for competition in the gas market. At the same time, the growing shortage of gas for domestic consumption and export supplies does not allow us to further delay the creation of civilized conditions for free competition. And the development trends of the international gas market along the path of liberalization require a gradual transition from state regulation to market formation of gas prices, the creation of conditions for the development of independent producers, the free sale of gas and ensuring non-discriminatory access to main gas pipelines and gas distribution networks.
Of course, the goal of gas industry reform in the form of creating a competitive market was formulated long ago. But the lack of coordinated approaches to the mechanisms for implementing such a reform and the timing of its implementation is practically blocking this process. Deputy Chairman of the Duma Committee on Federation Affairs and Regional Policy Viktor Borodai, who headed the Gas Vertical, believes that the association should become “a permanent working round table that will provide the opportunity to conduct a constructive dialogue, effectively identify problems in the gas industry, propose practical solutions and project them to the legislative plane.” He believes that differences in approaches to reform are no longer an insurmountable obstacle, since there is a unanimous desire to create a civilized gas market that ensures uninterrupted gas supplies to the population and strengthens Russia's position in the European market.
The central topic of the upcoming discussions is the role and place of independent gas producers on the market. It is generally accepted that the main goal of such companies is to gain access to exports and earn “gas dollars.” But Viktor Borodai poses this problem in a less simplistic way: “Today Gazprom is fully responsible to the state for providing gas to Russia’s internal needs. This workload requires adequate funding. The time has come to share this responsibility with those who also strive to be a full participant in the gas market.” In other words, independent producers also perform the function of developing gas resources, which Gazprom copes with great difficulty in the traditional (monopoly) system. This is one of the main reasons for the need for gas reform, and adjusting domestic gas prices and liberalizing access to main gas pipelines are ways to solve this problem. As a positive example, Viktor Borodai cites the Northgas company, which developed the North Urengoy oil and gas condensate field in record time, achieved the highest labor productivity in the industry through the use of modern technologies, and plans to expand production when marketing products within Russia.
Today, while the downward trend in gas production by Gazprom continues, the share of independent producers in total production is constantly growing and already exceeds 10%. These companies, as a rule, use new technologies and are distinguished by a high level of corporate culture and financial transparency. However, their contribution to the development of the gas industry is still significantly below their real capabilities. Independent companies own about 30% of the licenses for gas fields that they are ready to develop. But in the current conditions of work in the domestic market, the implementation of many projects is hampered due to their low profitability.
It would be fair to note that the difficulties of the reform are due not only to the position of the authorities and Gazprom, but also to objective reasons. One of them is the same “natural monopoly”. Gas can only be transported through pipelines owned by Gazprom. Building parallel systems would cost an astronomical amount. And whoever owns the “pipe” controls the market. The second problem is the government's reluctance to sharply raise gas prices, since this could trigger a surge in inflation in the country and put many consumers in industry and the public sector on the brink of survival.
This situation poses difficult tasks for the Russian authorities in developing new pricing, tax, export, technical and investment policies. So far, all projects for the development of the gas market come down to two models: a conservative one, which provides for the gradual formation of competitive relations in the field of gas trade while maintaining a high degree of monopolization of the market, and a liberal one, the basis of which is the structural reform of the gas complex. The sheer scale of the Russian gas industry, which accounts for 28% of global production, determines the scale and complexity of the changes needed. It would be a grave mistake to make poorly thought-out decisions that are fraught with unpredictable consequences. The example of the reform of the electric power industry, to which, thanks to the activities of the State Council, wide circles of the scientific, industrial and business community were involved, showed that even with this approach it is not always possible to find optimal solutions. Therefore, solving the tasks set by the Russian Gas Vertical is not only a timely initiative, but also a necessary condition for reforming the gas industry. ALEXANDER DAVYDOV |
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