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Gazprom in turbulence

Gazprom in turbulence

After the super successful year 2011, both in terms of the export volume and financial results, Gazprom found itself in a difficult situation. Concessions to European partners and losing the ground on the domestic market led to obvious difficulties.

This was coupled by the government feverishly looking for new sources of budget revenues. Political instability required additional expenses, which led to higher taxes on the gas industry.

The European Commission, on the background of problems with receiving access to Caspian gas resources and Lithuania’s complaints, launched antimonopoly investigation against Gazprom. It is fraught with large penalties and problems with business in Europe.

Meanwhile NOVATEK sharply intensified its lobbying efforts aimed at eliminating Gazprom’s export monopoly.

Gazprom retaliated by launching the Bovanenkovo deposit and connecting it to the single system of gas supplies – this is the first field in the Yamal Peninsula. The second line of Nord Stream was also put into operation, and everything is ready for the beginning of laying South Stream.

However, implementation of Shtokman is again delayed, although this is an important project from the point of view of LNG production. Besides, Gazprom has to start realization of the Eastern Program having no guarantee of selling gas.

The report elaborates on the following issues:

  • Gazprom’s positions in upstream segment and on domestic market

    • Beginning of Yamal development and gas production forecast
    • Maintaining and developing Single System of Gas Supplies
    • Difficult relations with independent gas producers
  • Problems on foreign markets and plans on developing resources in Eastern Siberia and Far East

    • Export strategy towards former Soviet states
    • Transit risks
    • Prospects of antimonopoly investigation, correction of Gazprom policies on European market
    • Restructuring of Gazprom’s export business
  • Possibilities of leaving for Asia

    • Prospects of gas projects in the East of the country
    • Real timeframe of creating export infrastructure there alternative to Europe
  • Future of Gazprom’s LNG projects

    • Stalling Shtokman and hopes for LNG plant near Vladivostok
  • Gazprom’s financial standing and political conjuncture around the company and gas industry

    • Gazprom’s new investment program; priorities of the company
    • Fiscal disputes with government; their outcomes
  • Medium-term forecast of developments

The contents of the report:

Introduction 3
Chapter 1. Gazprom on Domestic Market 4
1.1. Upstream. Yamal Launch, Nadum-Pur-Tazovsky Province Fading Away 4
1.2. GTS Maintenance and Development 7
1.3. Domestic Market. Competition Vs. Novatek, Gas Strategy of Rosneft. Refusal to Buy Gas From Independent Producers 9
1.4. Gas Prices. Pros and Cons of Equal Profitability Principle 13
Chapter 2. Gazprom’s Interests in Former Soviet Republics 16
2.1. Gas Purchases in Central Asia, Azerbaijan. Caspian Junction 16
2.2. Marketing Policy in Cis and Georgia 18
2.3. Consolidation of Beltransgaz 20
2.4. Ukraine: Sitting on Two Chairs 22
2.5. Moldova 25
Chapter 3. Exports to Outside CIS 26
3.1. Problems With Sales in Europe, Rise of Turkey 26
3.2. Political Conflict with EC, Domestic Pressure by Novatek 31
3.3. Gas Pipeline in EU: Construction Continues 33
3.4. Restructuring of European Business 36
Chapter 4. Alternatives to Europe. Eastern Course 38
4.1. Birth and Restoration of Eastern Gas Program 38
4.2. Problems in Upstream 40
4.3. Situation on Sales Markets of Eastern Gas 44
4.4. Stalling LNG. Shtokman and Yamal 48
Chapter 5. Financial Standing of Gazprom 50
5.1. Revenues vs. Expenses Race 50
5.2. Battle for Minerals Production Tax 51
5.3. Investment Scope 54
Chapter 6. Prospects of Development 57
6.1. Upstream 57
6.2. Domestic market 57
6.3. Exports to Europe 58
6.4. Ukrainian Issue 59
6.5 Eastern program 60
Date of release: December 17, 2012


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