Gazprom readying to adjust marketing policy

Gazprom's board of directors met in the gas monopoly's headquarters on January 26 to discuss issues related to correction of the concern's marketing policy amid the world financial and economic crisis and changes on markets of energy sources. Official results of the meeting look rather brief: on the basis of information provided the board of directors only approved of the work of Gazprom's executive board on preserving the Russian gas share in foreign countries' consumption volume on the existing level. It is planned to further develop a "set of measures" to use conjuncture changes on the gas market and to enter new markets with LNG and pipeline gas.

The lack of a detailed report about the event may mean that inside the gas giant and on the top political level there are serious discussions regarding the need for serious correction of Gazprom's marketing policy and investment priorities, but no final decision has been made. Yet, changes on gas markets obviously require Gazprom's quick and timely reaction.

In particular, one cannot avoid "final" recognition of changes on the US gas market where untraditional kinds of gas fuel (including shale gas) have led to such a revolution that the American market will become practically self-sufficient in the foreseeable future. Thus, recent big plans aimed at conquering almost 10% of the US market have to be revised. Meanwhile, the excessive amount of LNG from the American market will inevitably influence the demand and prices of Russian gas supplied to Europe through pipelines, which the company should get prepared for beforehand.

A new "adapted" marketing policy will affect the situation around production. According to some media reports, Gazprom will spend 405.1bn rubles on pipeline projects this year, which is almost thrice as much as on production projects totaling just 150bn. There are quite possible risks that the "closing" of the American market and growing competition in Europe may just increase the pipeline trend in Gazprom's investments to the prejudice of production projects. In particular, the fate of the Shtokman field becomes uncertain as substantial part of its gas was planned to be delivered to the USA. However, reducing production projects is unlikely to be strategically beneficial for Gazprom given the upcoming quick drop in traditional gas production in Europe (and not at all guaranteed perspectives of shale gas production in the Old World).
  
By NESF leading expert Stanislav Mitrakhovich