Non-uniform markup

Gazprom promises to sell above-limit gas at different prices

From July 1, Gazprom will receive the right, recently issued by the government, to sell gas in excess of the limits established for 2007 at 60% more expensive than at government prices. Kirill Seleznev, general director of Mezhregiongaz, which carries out about 80% of supplies to the domestic market, yesterday in his commentary on this event promised that the approach to consumers will be differentiated: “The price will depend on the consumer.” After all, 60% is the maximum markup level. Therefore, according to him, prices will be different for the electric power industry, metallurgy and chemical production, and it is also planned to take into account the “geography of the consumer.” Thus, Gazprom managers now have a tool for manipulating supply conditions depending on the consumer’s ability to find the right approach to the monopolist.

As you know, in early June, Prime Minister Mikhail Fradkov signed a decree establishing a new gas pricing scheme for new consumers and above-limit volumes for existing ones. In the second half of the year, the markup could be 60% of the regular rate, from January 1, 2008 - 50%, then it will be reduced by 10% every six months and completely disappear after 3.5 years, when the government plans to abolish price controls for industry and switch to a price formula that ensures equal profitability of supplies to the domestic and foreign markets.

Until now, there were penalty coefficients for gas supplies above the limit: in the heating season - 1.5, and in the summer - 1.1, which greatly irritated Gazprom. After all, the efforts of the gas concern aimed at launching an experiment with gas trading at free prices were strictly limited by the value of these coefficients (in winter, there was no reason for gas buyers on the electronic platform to give a price higher than the regulated price by 50 percent or more). As a result, the desire to end this practice was great, and it resulted in the adoption of a government regulation.

Mr. Seleznev claims that Gazprom will now be able to sell more than 5 billion cubic meters of “new” or above-limit gas by the end of the year, not counting the volume that will be sold through the site. Now the pace of trade on it is somewhat behind the planned ones. As of June 8, 3.3 billion cubic meters of gas were sold there, with a total quota of Gazprom and independent producers for 2007 of 10 billion cubic meters. The concern explains these figures due to the warm winter. According to the annual balance sheet, independent producers are going to sell only 3.7 billion cubic meters as part of the experiment. And if this volume is not increased, Gazprom, guided by the rule of parity (an important principle of the experiment), will have to limit itself to the same amount. Kirill Seleznev expressed confidence that sales at the site will reach the planned level by the end of the year. However, the government decree abolishes the principle of parity in practice - Gazprom will simply sell part of the gas at free prices not on the site, but under direct contracts.

In 2006, Gazprom supplied 316.3 billion cubic meters to the domestic market (an increase of 9.3 billion cubic meters, or 3%) in the amount of 404.8 billion rubles. The level of payment for supplies amounted to 97% (RUB 392.6 billion). The share of the unregulated market (supplies from independent producers) within the Unified Gas Supply System (UGSS) was 22%. Last year, the concern bought 9.7 billion cubic meters of gas from independent producers (it sold some under direct contracts, and some on the Mezhregiongaz electronic trading platform).

Alexey GRIVACHS