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19 Aug, 2008 02:33

Independents push for end to Gazprom’s export monopoly

Gazprom may soon lose its status as the sole exporter of Russian gas. The country’s antimonopoly watchdog is preparing amendments giving independent producers access to gas pipelines.

Independent gas producers have lobbied for access to Gazprom’s export routes for years. But they now have powerful allies, including the Federal Antimonopoly agency, a Deputy Prime Minister Igor Sechin – and the Economy Ministry. Denis Borisov, Analyst at Solid says Gazprom may be forced to share its export profits.

“Since Gazprom is a monopoly when it comes to selling Russian gas abroad, it may be asked to share the profit it makes – namely, the difference between export and domestic gas prices – with independent producers.”

Independent producers acocunt for about 15% of Russia’s total gas output, but that’s expect to double by 2020.  Experts say the Independents may gain access to the giants pipeline in line with their share of production.  But there is no consensus on the issue within the government and Vitaly Ermakov, from Cambridge Energy Research says this reflects two competing outcomes policymakers want in the gas sector.

“The Russian government is largely divided on the issue.  On the one hand, Russian policy makers want a tightly controlled state monopoly in the gas sector, which is a strategic sector.  On the other hand they would like to use the advantages of the market, they would like to bring in additional volumes that the independents can produce.”

The amendments would benefit some of Russia’s biggest energy companies, which have built up their gas units in recent years according to Denis Borisov.

“The main beneficiaries from the proposed changes would be Lukoil, TNK-BP, Rosneft and, of course, Novatek, Russia’s largest independent gas producer. They could gain a total of as much as $10 BLN a year in additional revenues.”

But the gas giant may not stand idly by, and watch its estimated $40 billion of export revenues cannibalized. If the legislation is passed, Gazprom may boost transportation fees for the independents to compensate its losses.