Gazprom in Internal, External Gas Markets: How to Share Gas ‘Pie’

The position of Gazprom is quite controversial. On the one hand, after several years of decline in production because of a rise in competition in the domestic market and negative trends in foreign markets, Gazprom is again increasing gas production. It sets record after record in the European market as it meets additional demand.

The attacks of independent producers demanding reform of the industry or at least access to export by pipeline have been repelled once again. The company has got a certain respite.

On the other hand, political resistance to Gazprom in Europe only increases. The final battle for the position in the future European market is beginning.

The opponents are doing all they can to stop or slow down the construction of Nord Stream 2. Neither do the internal gas producers intend to give up. Besides, Gazprom’s financial position has seriously worsened.

All this makes the situation in the gas industry quite intriguing.

In our report you will find answers to the following questions:

• What will happen to the domestic gas market?

  • The subject of domestic gas market reform remains a dominant one on the fuel and energy sector development agenda. The independents want to get access to the infrastructure and ideally, to have the transport and production divisions spun off from Gazprom. Victory in the 2017 battles does not mean victory in the entire war.
  • After the presidential election, the independents will inevitably mount a new attack.
  • What model of the domestic gas market will Russia switch to after all?
  • The report describes the current market situation; the successes and problems of the independent producers; the fight for regulated prices; and the development of exchange trade.

• What awaits Gazprom’s export?

  • Gazprom has launched grandiose construction. Three new projects at once must be completed by the end of 2019: Nord Stream 2, Turkish Stream, and Power of Siberia.
  • Gazprom hopes to start gas supply by pipeline to China and keep the current level of export to Europe while changing its logistics. However, these plans have political opponents, and rivals in the same sector.

• Does Gazprom have answers to its worsening financial position?

  • Major investment projects imply serious expenditure. One also has to take account of the relatively low gas prices in Europe and growth in the state-imposed tax burden. All this requires that the management take active measures to both attract foreign loans and improve spending efficiency.
  • We will check how the corporation copes with these challenges.

• How has the balance of forces in the corporation’s top management changed and what is to be expected in the near future?

  • The report describes the fight in the export division and changes in the procurement system.

Contents of the report: