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Top events of January 2014

The National Energy Security Fund introduces top-ten events in the oil and gas industry in January 2014 and is ready to comment on them in detail.

  1. Development of gas relations with Ukraine

    Unfortunately the Ukrainian soap opera continues. There is no progress. Moreover, control over developments in Ukraine is loosened, while gas debts are rising. Ukraine refused to pay for the January supplies; Ukraine decided that consideration of a possible gas discount could be viewed as possibility not to pay for gas imports at all. Earlier Ukraine claimed gas supplies were very expensive, but having received a discount it probably decided that it had nothing to pay with at all. Russia is in a very difficult situation now, because it is dangerous to suspend gas transit in winter and it is silly to watch your gas being siphoned off. So, we will be waiting for continuation of this story. Thus, the strategic choice in favor of replacing Ukraine with Nord Stream, South Stream and Belarus seems to be correct.

  2. Russia-EU summit discusses energy issues

    There is no progress in negotiations with Europe. Although Vladimir Putin declared that agreements on OPAL had been reached, it has not been confirmed by practical decisions. Yet, there is hope that the situation will improve, because the year 2013 was very fortunate for Russian gas in the European market. Meanwhile, European authorities will be reelected in the near future, which may also lead to some positive changes.

  3. Contract on purchases of Iranian oil

    In January the Russian government was rumored to be readying to sign a contract on purchasing a large volume of Iranian oil. Russia intends to exchange this oil for commodities and then sell it on the world market. The deal is very controversial. Iran is our competitor on the world market; thus it is absolutely unclear why we should help Tehran. And we will have to help because we shall be responsible for final sale of Iranian oil. This means that we will withdraw our oil from the market but simultaneously we will have to sell Iranian oil on this market. This is why this decision looks questionable and ambiguous. The Iranian problem should be solved by OPEC. Russia seems to be afraid of losing the initiative regarding Iran. It is clear that a decision on removing sanctions was lobbied by the USA. We have lost the initiative in this sphere; closer relations between Iran and the West are not a positive sign for us, as Iranian gas projects can be unlocked. So, it would be logical to try to preserve isolation of Iran, not to help it.

  4. South Stream negotiations

    It seems obvious that settling the Ukrainian issue should not be delayed but be implemented as soon as possible. This problem should be solved first of all by South Stream. There is no progress on this pipeline. In January good news about this issue were followed by bad news from the European Union. The matter is that Gazprom has found a variant to bypass the third energy package. It is about intergovernmental agreements signed with governments of EU member-states. EU authorities in fact demand rejecting the retroactive effect of the law insisting on revision of the agreements post factum, which fully contradicts European legal norms. The question is how this collision will be solved in the foreseeable future? We face quite serious violations of the European law. Actually Europe obviously should assist construction of South Stream, but instead it only hinders this process.

  5. New round of talks on Gazprom gas exports to China

    On one side, the negotiations did not deliver the result. On the other side, Gazprom quite clearly defined the deadline – May 2014 when Putin is expected to visit Beijing. If the contract is not signed by this moment, it may create political problems for Gazprom, and the latter is unlikely to take such risk. This is why we will be waiting for May. The fact that Gazprom has indicated the deadline shows that the company is confident at the talks. China does not have enough of natural gas; Beijing buys LNG at high prices. Thus, there are grounds to expect gas agreements to be signed with the PRC.

  6. Struggle for seats in boards of directors of state companies

    The process of nomination of candidates to boards of directors of state companies began in May. Igor Sechin made quite an interesting move trying to put forward the head of Itera, which is in fact owned by Rosneft, to the board of directors of Gazprom. This is rather impudent from the point of view of competition. Sechin’s attack on that stage was repulsed, but he will definitely try to impede Gazprom later.

  7. New head of Rostekhnadzor

    Former deputy general director of Rostec Corporation Alexey Aleshin has a new appointment. Russia’s federal service for ecological, technological and nuclear supervision Rostekhnadzor is an important organization that can be well used in struggle for property – it can cause problems to any company. The question is whose side the new head of Rostekhnadzor will take?

  8. Yamal LNG contracts ¾ of phase 1 production capacity, starts planning phase 2

    The project enjoys huge state preferences, develops quite successfully and makes happy foreign partners, but it also raises questions. Are private companies indeed discriminated against as it is commonly claimed? None of Gazprom’s projects enjoys such preferences as this project of the private company NOVATEK.

  9. Petrol prices keep growing

    The ruble devaluation led to advance in petrol prices followed by accusations of oil producers. But on the whole we see that the oil industry still faces serious rise in the tax burden that has to be compensated by higher domestic prices. Moreover, the devaluation made exports of oil products more profitable. Thus, we should be ready for further increase in petrol prices.

  10. Energy ministry presents 2035 energy strategy

    The draft document contains a lot of information about reforms in the gas industry, and some experts perceived it as signal to restructuring of Gazprom. However, it is a common knowledge that such energy strategies are not implemented by anyone, and definitely they are not perceived as guidelines. Moreover, by 2035 the government and the president of Russia will have changed many times. So, the content of the document is still up in the air reflecting lobbying efforts of some groups rather than the real layout of forces.


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

State regulation of the oil and gas sector in 2023, 2024 outlook
Gazprom in the period of expulsion from the European market. Possible evolution of the Russian gas market amid impediments to exports
New Logistics of Russian Oil Business
Russia’s New Energy Strategy: on Paper and in Fact
Outlook for Russian LNG Industry

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

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