Russia remembers independent gas producers

RIA Novosti ^ | Dec 08, 2006 | Vasily Zubkov

[sergey1973]

MOSCOW. (Vasily Zubkov, RIA Novosti economic commentator) - In the context of the forecasted gas shortage in Russia, the government has called for increasing the role of the so-called independent gas producers.

In late November, the first electronic gas trading session was held in which such producers received the same rights as Russian gas monopoly Gazprom. Many said it was evidence that Russia was beginning to liberalize its gas market.

According to the International Energy Agency, by 2020 worldwide gas consumption will almost double to more than 5 trillion cubic meters a year. By that time, the world's largest gas producer, Gazprom, is expected to produce 590 billion cubic meters of gas annually (it will produce 551 billion cubic meters this year), according to the Russian energy strategy until 2020.

[sergey1973]

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[BeckB]

I am trying to remember. Didn't Russia nationalize Gazprom.
When will governments learn that they can't run businesses efficiently or productively.

[Valin]

AZERBAIJAN KEEPS SOLIDARITY WITH GEORGIA DESPITE RUSSIAN ENERGY SUPPLY CUTS
Jamestown.org ^ | 12/8/06 | Vladimir Socor

http://www.freerepublic.com/focus/f-news/1751125/posts


On Wednesday, December 6, Gazprom spokesman Sergei Kupryanov confirmed recent press reports that Gazprom will abruptly slash gas supplies to Azerbaijan to 1.5 billion cubic meters in 2007, down from 4.5 billion cubic meters in 2006, and that it would raise the price as of January 1, 2007, to between $200 and $230 (“European price”) per 1,000 cubic meters, up from $110 in 2006 (Interfax, December 6). These Gazprom decisions are correlated with its declared intention to stop gas supplies to Georgia as of January 1, unless Georgia agrees to pay the extortionate $230 price.

Gazprom hardly bothers to adduce economic rationales for that price, which is in fact political and punitive: It practically equalizes Azerbaijan with Georgia at $230, while their neighbor, Moscow-allied Armenia, continues paying $110 per 1,000 cubic meters. However, Gazprom explains the reduction in its deliveries by citing Azerbaijan’s potential to increase its internal output of gas.

Moscow has two unstated reasons for cutting the supply to Azerbaijan: first, to prevent it from supplying gas to Georgia, if Gazprom cuts off Georgia completely as planned and, second, to shift some Russian export volumes to European Union markets, where Gazprom can no longer be certain of meeting its growing supply commitments from the stagnant extraction levels in Russia.

Further complicating Azerbaijan’s situation, Russia’s Unified Energy Systems (UES) announced in late November that it would deeply cut electricity supplies to Azerbaijan, from the equivalent of 300 megawatts per day in 2006 to a daily equivalent of 60 megawatts after January 1, 2007, as well as raising the price of that electricity by 13%. As in Gazprom’s case (and partly due to Gazprom’s deficiencies), UES faces difficulties in supplying domestic and foreign customers at the same time, given stagnant gas supplies to UES electricity-generating plants. However, UES has hit Azerbaijan selectively, even as the company seeks to increase its electricity exports in other directions.

(snip)