Gazprom’s Monopoly On Exports Backed by Duma
Published: July 7, 2006 (Issue # 1184)
MOSCOW — The State Duma overwhelmingly approved a bill Wednesday formalizing Gazprom’s monopoly over gas exports, defying EU calls for liberalization on the eve of the Group of Eight summit.
The legislation is likely to exacerbate tensions between Russia and the European Union. Energy security is expected to top the G8 agenda in St. Petersburg.
“The principle of a unified export channel has always been part of our export strategy, though it hasn’t been set out in any normative documents or legislation,” Gazprom spokesman Sergei Kupriyanov said. “Now it will become the law.”
Besides cementing Gazprom’s role as Russia’s sole natural gas exporter, the law extends the company’s export monopoly to liquefied natural gas, or LNG, and liquefied petroleum gas.
While Russia does not produce LNG for now, it will begin doing so in the near future, as the Sakhalin Island and Shtokman gas fields come on line.
The sole exception to the new bill allows non-Gazprom gas exports from companies that hold production sharing agreements, or PSAs, with the Russian government. Royal Dutch Shell and ExxonMobil hold PSAs from the 1990s at the Sakhalin-1 and Sakhalin-2 fields.
The EU, rattled by drops in Russian gas shipments during Gazprom’s January price dispute with Ukraine, has pushed Russia to break up Gazprom’s export monopoly and ratify the Energy Charter Treaty, which mandates that signatories hew to market-based principles in energy investment and transit.
Russia seems to have hardened its stance against both the Energy Charter Treaty and breaking up the monopoly in recent months, paving the way for renewed conflicts at next week’s summit.
The new bill “proceeds from the necessity of defending Russia’s economic interests, fulfilling international gas export obligations, securing federal budget revenues and supporting Russia’s energy balance,” Interfax reported Wednesday, citing the text of the bill.
A virtual who’s-who of Russian energy companies unsuccessfully lobbied to restrict the bill’s scope after it was introduced in the Duma in early June.
Vladimir Volubyov, a spokesman for joint Russian-British energy company TNK-BP, said his company sent its proposals to the Duma’s Energy Committee along with those from oil companies LUKoil and Rosneft, and independent gas producers Itera and Novatek but that they were rejected without explanation.
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