Investors await opening of Russian commodity exchange

Russia’s first commodity exchange is scheduled to open in St. Petersburg this summer. Gazprom has said it will trade gas futures on it. The company says it wants to improve the pricing system for natural gas.

Although the exchange is only due to open this summer, by the end of the year it’s expected to have a turnover of around $US 63 billion.

The idea of creating the commodity exchange dates back to 2006. It has been announced that trade will be conducted in roubles, a move which is seen as an attempt to enhance the currency’s global significance.

At first, only oil products will be exchanged. Construction materials, grain, and mineral fertilisers will follow suit.

Gazprom has begun work on gas futures for the exchange. Trading is planned to open next year, along with the commissioning of the Nord Stream pipeline.

Aleksandr Medvedev, General Director of Gazprom Export was keen to point out the advantages of the new system.

“In Russia we already have good experience trading natural gas on the electronic trading floor and this is the best way to find the fair price for Russian gas especially in view of switching to the equal profitability of local and export sales starting from 2011. So this is an instrument for defining adequate prices,” he said.

However, analysts are skeptical as to whether trading will lead to major price changes.

“The market for futures trading of gas is not really about the fundamentals of what the gas business wants and what the energy industry wants. It's about what banks want and what financial institutions want.I think the market will quite welcome it and enjoy trading where there's potential for money to be made,” commented Tom Mundy, Equity Strategy VP at Renaissance Capital in Moscow

As investors wait for trading to begin, it remains unclear to producers and consumers how or if Russian commodity prices will be affected.