Report: Lack of reasonable tariffs may lead to gas deficit in Russia

MOSCOW, Oct 24 (PRIME) -- Russia’s natural gas market may face a deficit of raw materials without proper tariff regulation and rules that are understandable for market participants, Leonid Mikhelson, CEO of independent gas producer Novatek, told business daily Kommersant in an interview published on Monday.

Gas giant Gazprom earlier asked the Federal Antimonopoly Service to raise the gas transportation tariff by 2% from July 1, 2016, while independent gas producers asked the service to cut it. The service decided there were no grounds for the tariff increase and later approved keeping the tariff flat in 2016.

“You are asking me about our strategy and production of gas. But what are our conditions? We are now switching to regions that are located far from places of production, we are supplying gas to the Lipetsk and Smolensk regions. The transportation tariff accounts for more than 50% of our gas price. Investment in maintaining production directly depends on the government decisions on the issue,” he said.

“The situation is the same with underground gas storages. We’ve pumped a record amount of gas in storages this year, about 15% more than last year. Gazprom increased the storage tariff by 2%. They did not increase tariffs for gas, but raised the storage tariff. We have to have proper tariff regulation and rules that are understandable for market participants. Or we will face a gas deficit in a foreseeable future.”

He also said that Novatek is against the government’s experiment to amend state regulation of gas prices and abolish the minimum price for natural gas in the Khanty–Mansi Autonomous District and the Tyumen Region from 2017.

“We have a unified gas transportation system, and I think it is nonsense when one region lives in a unified pricing system while all other regions live in another system. It is even stranger when such an initiative comes from the antimonopoly service that is to monitor competition. This issue covers not only the gas sector, but the whole industry,” he said.

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