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Announcement of a series of analytical reports «The fuel and energy complex of Russia» - 2012

The Fuel & Energy
Complex of Russia:
Reality and Possibilities – 2012

The National Energy Security Foundation presents a traditional series of analytical reports devoted to main problems of development of the Russian oil and gas industry. Subscribers are provided with detailed descriptions of the condition of the Russian fuel and energy sector, the state system of administrating the sector as well as scenarios of its development in the medium-term perspective.

The range of sources used includes NESF’s in-house information, sectoral statistics, data from companies operating in the oil and gas sector, laws and bills, information from federal and regional mass media sources, materials of conferences and round-table meetings.

The series consists of 8 (eight) reports to be published in February through December 2012.

1. Old and new routes of Russian gas to Europe: situation around supplies through Ukraine and Belarus, development of alternative routes

(March 12, 2012)

Debates on the fate of transit through Ukraine and Belarus lasted throughout the whole year 2011.

Amid the economic crisis Belarus had to exchange its pipeline for a discount on natural gas supplies making Gazprom’s old dream come true – now it is in full control of main gas pipelines through this state.

Ukraine turned out to be more stubborn and even risked terminating transit agreements of January 19, 2009. This obviously raised the question of reliability of transit via Ukraine. The Belarusian political system also makes us think over stability of Gazprom’s control over its pipeline.

These questions force Russia to actively develop alternative routes, which requires renegotiating existing contracts and active cooperation with European companies. Simultaneously it is necessary to overcome fierce resistance of European regulators that still view Russian natural gas as threat.

2. Arctic and other shelf projects in Russia

(April 23, 2012)

The focus in the production segment is more and more vividly shifting from the land to the shelf. This global trend has reached Russia. State companies have been engaged in distribution of offshore licenses for a long time. The question is what will happen to production.

State companies and certain private firms have already set up alliances with large western corporations whose future needs to be analyzed. Nonresidents insist on new rules of the game that include a special taxation regime and putting offshore reserves onto their balances. Moreover, it is planned to involve the state in financing some infrastructure development.

Some Russian companies that do not have close connections with state leaders demand making the shelf more accessible. Meanwhile, the Arctic fever continues in Russia: functionaries more actively debating the Arctic future that, actually, still needs to be carefully evaluated.

3. New structure of managing the oil and gas sector

(June 11, 2012)

The new composition of the Cabinet and President’s Executive Office is finalized; administrative powers are distributed. Now it is possible to analyze the system of managing the oil and gas sector after Putin and Medvedev swapped their posts. It is clear that some principles are stable (e.g. Putin’s central place in the decision-making system). However, details may turn out to be important. The new “great migration” of functionaries from the Government Building to the Kremlin and vice versa seriously changes the layout of forces in bodies supervising the sector development.

4. Putin’s new energy policy

(July 23, 2012)

On one side, Putin’s comeback as president should not change anything in the state energy policy. On the other side, the sector is facing a set of crucial questions and their settlement is impossible to ignore. This concerns a new export strategy, prospects of reforms in the gas sector, liberalization of the domestic gas market and a new structure of the energy balance that will make the future of the coal and nuclear energy clear.

There is a problem of a new taxation system, which is closely connected to defining the role of the oil and gas sector in Russia’s economy. The fiscal system can be aimed either at taking away revenues from producers of hydrocarbons or, on the contrary, at encouraging development of new production provinces. Another dilemma is whether to turn Russian companies into global players or to stake on domestic production development.

5. Central Asia and Caspian Sea region: struggle becoming tougher

(September 17, 2012)

The Caspian Sea region and Central Asia are almost the last real hope of Europe for diversification of oil and gas supplies. The EU promotes projects like a trans-Caspian gas pipeline that Russia does not like. Active struggle for Turkmen and Azerbaijani gas is starting. Pipeline war between South Stream and Southern Corridor is in full swing.

6. Domestic market of energy resources

(October 29, 2012)

Supplies to the domestic market have always been considered less profitable compared to exports. However, the situation is changing. In the oil business growth in profits is the result of oligopoly on the market. The situation in the gas market is opposite – growth in prices is expected to follow after the market liberalization. Introduction of the principle of obtaining equal revenues from exports and domestic supplies will result in new advance in domestic gas prices.

We already observed some interesting developments after the electrical energy market liberalization – reforms aimed at reducing prices through competition mechanisms led to increase in the cost of electricity. That made industrial enterprises actively build their own generating facilities, and some industry players even started thinking of launching their own production of hydrocarbons.

7. Gazprom in turbulence

(December 3, 2012)

The year 2011 showed that Gazprom was entering the zone of turbulence. Difficulties on the European market continue as regulators do not agree to make their stance on Gazprom more tolerant.

Negotiations with China are not simple. But the main trouble comes from where Gazprom’s position has always seemed to be extremely firm. Vladimir Putin’s favorite company is facing bigger and bigger problems in the country. The gas market liberalization is becoming more and more popular topic. Putin even mentioned elimination of Gazprom’s export monopoly.

NOVATEK is pressing Gazprom on the domestic market inter alia aggressively developing projects aimed at exports. The state is directly taking part in this process. The new system of pricing on the domestic market does not seem to be a concession made exclusively to Gazprom. Meanwhile, nobody has fully solved Gazprom’s traditional problems such as the necessity to launch new Yamal projects.

8 State regulation in the oil and gas sector in 2012, prospects for 2013

(December 31, 2012)

This is a traditional report concluding our oil and gas series. The report will contain analyses of production results of the year, main novelties in the sphere of state regulation of the sector, changes in taxation policies, struggle for assets as well as a traditional forecast of the sector’s development in the medium-term perspective.


If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

World LNG market: Russia, its main competitors
Three years under sanctions: their influence on Russia’s fuel and energy sector
Asia market: potential of Russian oil and gas exports to the East
State regulation of the oil and gas sector in 2016, prospects for 2017
Gazprom: Goliath is not going to surrender

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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