Management Committee considers outlook for transfer to market-based gas pricing principles
The Gazprom Management Committee took notice of the information regarding the prospects for a transfer, starting from 2011, to the market-based pricing principles for the natural gas supplied by the Company to the domestic market. The issue will be submitted to the Gazprom Board of Directors for consideration.
The Company’s specialized subdivisions were tasked to continue cooperating with federal executive authorities towards moving over to the formula-based gas prices for Russian industrial consumers starting from January 1, 2011, to achieve equally profitable gas sales both on the domestic and foreign markets with due regard to the interfuel competition.
It was stressed that at the working meetings of the Russian Energy Ministry, the Russian Ministry of Economic Development and the Russian Federal Tariff Service a common opinion was reached that there was a need to introduce a transition period (2011–2013). During this period it is necessary to gradually raise the domestic prices by 2014 to the level of equal profitability.
In this context, Gazprom has prepared a draft directive of the Russian Government that stipulates, inter alia, the formula-based wholesale prices discounting to the level defined by the Russian economy development scenario for 2011–2013.
Thus, the gas price could attain market properties as soon as in 2011.
Pursuant to the Russian Government Directive No.333 dated May 28, 2007, the ministries concerned, the Russian Federal Tariff Service and Gazprom are considering the issues of a transfer, starting from January 1, 2011, to the market-based pricing principles applying the market-based pricing formula. In the majority of long-term gas supply contracts signed by Gazprom and its industrial consumers, the Company has provided for application of the pricing formula from 2011 in compliance with the decision by the Russian Federation Government.
A timely transfer to shaping domestic gas prices on the basis of market principles, which reflect the consumer properties of gas and the interfuel competition, will promote creation of the conditions that will make the domestic market a real driver for sustainable development of the gas sector and related industries, as well as for enhancement of the energy efficiency of the national economy in general.