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

This is a traditional report by NESF that sums up main results of the year in the sector and outlines the agenda of the next year. Production results in the oil and gas industry, main novelties in the sphere of state regulation, changes in taxation policies and struggle for assets are the issues addressed in our final report this year.

The report elaborates on the following issues:

• New system of state management of the sector, analysis of its efficiency

  • In May 2012 the executive power was seriously reconfigured. This definitely affected the oil and gas sector. However, thoroughly analyzing the first six months of work of the new system one can find many very familiar features in it. Putin reshuffled the pack but he did not alter key principles of organization of the power vertical. Major clans were regrouped but they kept fighting for powers with Putin being supreme arbiter.

• Preparation for the big Putin privatization

  • Experts were speculating about strengthening of the state capitalism paradigm during the whole year. In reality new acquisitions of state companies are simply preparation for their privatization. Putin honestly acknowledged this in his address at the end of the year.
  • Privatization will be the main trend in the next few years. And it is important to understand what clans may become its main beneficiaries.

• Taxation policies

  • On one side, a lot of decisions important for the sector were made in 2012. On the other side, state authorities did not venture to revise the fundamental approach to taxation in the sector. The economic situation in the country does not provide for the opportunity to make breakthrough decisions. This lays the foundations of new problems in the upstream segment.

• Export policies

  • Heated debates on prospects of the turn to the East continued throughout the whole year. Gazprom made a final investment decision on developing Chayandinskoe and is ready to begin construction of a gas pipeline from Yakutia to Vladivostok where a new liquefied natural gas producing plant is to be built.
  • At the end of the year the second phase of ESPO was launched. However, one simple question remains – how to increase supplies to Asia and simultaneously to preserve the share on the European market without serious growth in production.

• Medium-term forecast of developments

The contents of the report: