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zation and competitiveness, access to infra-
structure and consumers, applied trade me-
chanisms); Bcm 337
• fundamental indicators of the industry (supply 324 286
and demand, structure of the fuel and energy 220
balance); 167
• government rental policy and related taxation; 94 157
• regulatory mechanisms and pricing models.
9
External:
• dynamics of fundamental indicators;
• pricing practice (mainly in Europe); Figure 1. Gazprom’s vs. IGP’s volumes of natural gas supply to the RF domestic market
• requirements of international agreements. Source: compiled by the authors based on the data of the Companies
For Russia, the optimality of the applied gas mar- according to the federal laws, have different op-
ket regulation models is difficult to overestimate. tions to sell gas delivered via pipeline to domestic
Indeed, the correct choice of such a model di- consumers.
rectly depends on whether Russia can monetize
its world’s largest gas reserves with a rate of re- The Russian domestic gas
turn that would be sufficient both for solving socio-
economic problems and ensuring stability and pre- market model is dual-tiered,
dictability of the gas business. Today, the answer “shared between Gazprom
to this question is not obvious because of the fol- and the Independent
lowing reasons.
The mechanisms of economic regulation of the Gas Producers (IGPs)
gas market operating in the Russian Federation do
not contain built-in tools for controlling production The share of the IGPs in Russian natural gas pro-
costs, motivate investment planning without taking duction accounted for about 25%. The largest
into account their effectiveness, and do not set li- independent gas company, “Novatek”, produced
mits on the growth of gas prices and gas transpor- 74.7 billion cubic meters in 2019. However, given
tation tariffs. This determines two main risks: the the fact that Gazprom has the monopoly on the
first is a decrease in the efficiency of the national export of network gas, the share of IGPs in sup-
industry due to excessively high prices and tariffs plying gas to the domestic market is slightly higher
for gas, the second is stagnation or a reduction in and amounts to approximately 35%. Data on the
gas production due to excessively low prices if their dynamics of the ratio of gas deliveries to Russian
growth is “frozen”. consumers is shown in Figure 1.
The implementation of any of these risks will lead
to the expectations and opportunities of Russian The logos shows the largest Russian IGP’s in the
suppliers in terms of prices and volumes not coin- corresponding year. Gazprom exercises de jure
ciding with the expectations and capabilities of gas and de facto control and regulatory functions on
consumers. That means that the supply side will the access to the Gas Transportation System of the
not be able to supply gas to consumers in such an UGSS; pipeline gas flows and transactions of inde-
amount and at a price that will satisfy them. pendent producers via project design activities (the
An effective price for a producer is one that covers main design organizations are part of Gazprom’s
costs and provides a rate of return sufficient for ex- structure) and the country’s balance sheet of gas
panded reproduction in the industry. There are two production and consumption (the IGPs have no
ways to ensure this sufficiency. Either raise the pri- right to produce and supply gas to consumers wi-
ce, or reduce costs. Opportunities for further price thout accounting their volumes in the balance and
increases (domestic and export) in Russia seem to volumes and directions of the gas supplies sold on
be exhausted. Apparently, the option of reducing the Russian gas exchange).
costs remains. Is it possible in Russia? And within
what national model of gas market regulation? The
search for such an optimal model is the challenge
facing the state, industry and society as a whole. Russian gas market
on the path of slow but
sustainable reforms
Key features of the russian Although Gazprom’s monopoly position in the do-
natural gas market structure mestic market is still strong enough it has begun to
decline gradually since the mid-2000s. In 2013 the
The Russian domestic gas market model is dual- Government of the Russian Federation allowed the
tiered. It is shared between Gazprom - that holds a largest IGPs (namely “Novatek” and “Rosneft”) to
whole gas value chain “from the well to the burner”, export liquefied natural gas (LNG). In 2014 natural
and the Independent Gas Producers (IGPs) – that, gas exchange has been launched in Russia. These

Impiantistica Italiana - Gennaio-Febbraio 2021 45