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Gazprom: the life in the epoch of sanctions, the turn towards the East, growing domestic competition

Gazprom: the life in the epoch of sanctions, the turn towards the East, growing domestic competition

Gazprom has found itself under double pressure. On one side, it is becoming more complicated for Gazprom to deal with the EU that strongly perceives the Russian company as an instrument of political pressure by Russia.

On the other side, the gas giant is attacked on the domestic market by large independent gas producers that are suffering from sanctions and count on expansion of their share on the domestic market as compensation. Besides, the period of low prices of hydrocarbons continues on the world market.

Yet, as the saying goes, every cloud has a silver lining. The political situation is assisting Gazprom in some way – at least, the question of the concern’s restructuring is not that acute on the agenda. Vladimir Putin is not ready to begin serious reforms in such complicated political and economic conditions. Yet, Gazprom still has to solve important tasks, e.g. to quickly reorient towards China, expand the domestic demand and find investments amid its limited access to credit markets.

The report elaborates on the following issues:

  • Development of the domestic natural gas market

    • A new campaign against Gazprom by independent gas producers, outcomes
    • Weak consumption on the background of excessive production capacities
    • Pricing system: problems and prospects
    • Results of the first year of natural gas trade on the exchange

  • Gazprom on the European market

    • Demand for Russian natural gas in Europe and Turkey
    • Antimonopoly investigation by the European Commission, prospects

  • Gas transit difficulties, new gas transportation projects

    • European triangle: Nord Stream-2, Turkish Stream and Ukraine’s GTS
    • Stability of transit via Ukraine
    • New winter package: Ukraine is entering a new heating season

  • Gas turn towards Asia

    • Power of Siberia: transfer to construction stage
    • Negotiations on expansion of gas supplies to China
    • LNG in the Far East

  • Finances of Gazprom amid sanctions

    • The company’s investment program
    • Fiscal appetite of the state

  • Reforms in Gazprom’s corporate structure

  • Medium-term forecast of developments

Contents of the report:

INTRODUCTION 4
Chapter 1. DOMESTIC GAS MARKET: COMPETITION ON THE RISE, UNLIKE CONSUMPTION 5
1.1. Situation on the domestic market: weak consumption amid excessive production capacities 5
1.2. Pricing system, gas supplies to the market: regulatory zugzwang 13
1.3. Outcomes of the first year of gas exchange trade 17
1.4. New campaign on restructuring Gazprom 19
1.5. Natural gas motor fuel as new driver of Russia’s gas market 20
Chapter 2. GAZPROM AND UKRAINE: RISKS OF RADICALIZATION OF THE SITUATION 23
2.1. Gas balance of Ukraine on the threshold of winter 23
2.2. New winter package agreement 26
2.3. Natural gas transit through Ukraine 29
Chapter 3. GAZPROM IN EXTERNAL MARKETS 32
3.1. Standing of Gazprom on the EU market 32
3.2. Gazprom supplies to European markets 35
3.3. Situation on the Turkish market, supplies by Gazprom 38
3.4. Gas transportation triangle: Nord Stream-2, Turkish Stream, Ukraine’s GTS 41
3.5. Antimonopoly investigation of the European Commission, concept of the Energy Union 43
3.6. Diversification strategy: Eastern vector of Gazprom and LNG 47
Chapter 4. GAZPROM FINANCES, STAFF RESHUFFLE 52
4.1. Financial standing of Gazprom 52
4.2. Investment program 54
4.3. Debt burden of Gazprom 57
4.4. Fiscal appetite of the state 58
4.5. Personnel reshuffle at Gazprom 60
Chapter 5. MEDIUM-TERM FORECAST OF DEVELOPMENTS 63
5.1. Domestic market 63
5.2. Ukraine 64
5.3. Export markets 64
5.4. Financial standing 65
Date of release: December 28, 2015

If you are interested to obtain please contact » Elena Kim

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

Outlook for Russian LNG Industry
Russian Energy and West One Year after Ukraine Conflict Began: Are There Connections Still?
Green Agenda in Russia during Bitter Conflict with West
After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.
Oil and Gas Sector Regulation in 2022 and Prospects for 2023
Gazprom at the Forefront of Economic and Political Battles with Europe
Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

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