Gazprom proposed liberalizing wholesale gas prices for industrial consumers in certain regions, introducing seasonal differentiation and introducing a trade balancing system. In an interview with Kommersant, Associate Professor Leonid Krutakov from the Finance University within the Government of the Russian Federation explained how necessary this is for the market and what liberalization is.
According to him, it is necessary to liberalize the market because it means equal conditions. For this reason, he stated that these should be provided not only in access to domestic consumers, but also in access to gas infrastructure, for example.
The expert noted that Gazprom wants to liberalize the market but retain access to the pipe. According to him, it makes sense to make it a separate company and subordinate it to the state, which would set the tariffs.
“If you have produced more fuel than you can sell on the market, you have no place to store it, you have to sell it to Gazprom and of course at a discount because you have no place to store these volumes. At the same time, it should be noted that 70 percent of the company’s investments in recent years are not for the development of the internal pipeline system, gas storage system, infrastructure, but for export.
He reminded that today independent manufacturers are denied access to the pipe and chemical and chemical complex for lack of space.
“We didn’t develop it, and it looks like we won’t be developing it with monopoly ownership. Second, access to resources needs to be liberalized,” the expert explained.
He also emphasized that with a possible liberalization, there will be direct competition with independent suppliers. In addition to Gazprom, there are two main players of this type on the market – Rosneft and NOVATEK. The expert believes that in this structure, where the Russian gas infrastructure is located, reconciliation is impossible, as Gazprom has huge advantages over the others.
According to Krutakov, it is easy to predict what the liberalization of the Russian consumer market proposed by Gazprom will lead to, while maintaining its monopoly position in the transport sector and exports.
“I would start by taking the infrastructure out of Gazprom’s control, following the example of China, the EU, and the United States, and they solved the pipe problem for a long time. Because with the current market structure, liberalization will turn into monopoly.”