Liberalisation Heralds Change in the Gas Market

Author(s): Simon Pirani
Editor(s): Stephen Aris, Matthias Neumann, Robert Orttung, Jeronim Perovic, Heiko Pleines, Hans-Henning Schröder, Aglaya Snetkov
Series: Russian Analytical Digest (RAD)
Issue: 100
Pages: 10-14
Publisher(s): Center for Security Studies (CSS), ETH Zurich; Research Centre for East European Studies, University of Bremen; Institute of History, University of Basel
Publication Year: 2011

The Russian government's efforts to liberalize the domestic gas market, and specifically to raise gas prices to levels comparable to those in Europe, will be a decisive factor in the country's energy sector over the next 5 to 10 years. Already, Ukrainian prices are close to European netback (i.e. European border prices minus export duties and transport costs) - and although Russian prices lag behind, sales across the former Soviet Union have become much more important to Gazprom, Russia's dominant, state-controlled gas company, than they were during the oil boom of 2002-08. In the domestic market, Novatek (Russia's no. 2 gas company after Gazprom) and the oil producers now account for one quarter of sales, and are giving weighty political support to liberalization.

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