The Kremlin has stated its position on the Gazprom reform

Saturday, January 18, 2020

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The Kremlin has stated its position on the Gazprom reform and the Gazprom-Rosneft merger for the first time in recent weeks. "Do not expect any comprehensive reform," presidential aide Igor Shuvalov said yesterday. It seems that the government's liberal wing will be unable to overhaul the natural gas concern. At any rate, this concerns the division of competitive and monopolist types of activity, i.e., gas production, transportation and sales, writes Izvestia. This reform has been discussed for several years, but without any results. The government still does not have any plans or deadlines for reforming the sector, while the reform's concept is becoming narrower every year. If the Economic Development and Trade Ministry previously said that the gas market would be overhauled along RAO UES (Unified Energy Systems) lines, when the national power grid was divided into competitive and monopolist activity, then now the reform is focusing on spending cuts, increasing transparency and improving finances. Initially idea was to withdraw the pipeline network from Gazprom and to turn the latter into an independent company. The Economic Development and Trade Ministry's experts believed that this would make it possible to establish a competitive national gas market so that prospective clients could choose between Gazprom and independent producers. However, Shuvalov thinks otherwise. He confirmed that Gazprom would keep its pipelines. The concern will continue to monopolize gas-export rights, the presidential aide said. However, Shuvalov believes that independent producers should receive non-discriminatory access to Gazprom pipelines. Gazprom does not object to other companies using its pipelines, but is insisting on at least a partial liberalization of domestic gas prices, which the Federal Energy Commission regulates. However, the latest corrected reform plan for the natural gas market proposes establishing a "pilot" market that with an annual volume of about five billion cubic meters.

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