Board of Directors endorses contractual sales of part of Gazprom's gas on domestic market
Message to the Media
The Board of Directors’ meeting is underway at Gazprom’s Headquarters.
The Board heard a report on the measures being stepped up to expand the non-regulated sector of the wholesale gas market, endorsing the proposal to launch in 2005 domestic trial sales of part of the gas (to 5 bcm) produced by the subsidiaries at market prices. The proposal also stipulates independent gas producers being furnished with prompt access to Gazprom’s Gas Transmission Network (GTN), with adequate amount of gas being marketed through stock market technologies.
The Board also resolved to keep on actively interacting with executive bodies, independent gas producers and non-profit gas supply organizations in agreeing on the trial sales project subject to the RF Government’s approval.
The experiment won’t apply to the population, utilities and budget-sponsored companies.
Background
In pursuance of the May 2002 Directive No. 328 of the RF Government, Gazprom and other gas market players were licensed to sell independent producers’ gas at market prices. In the 3rd quarter of 2002, Gazprom launched wholesale gas trading.
For this purpose, Mezhregiongaz created an E-Commerce Site allowing to purchase and sell gas at contractual prices. 44 regional companies and 152 large end-users got involved in the trading, striking deals with some 2.5 bcm of gas over 2.5 years.
Along with stock market technologies, conventional gas flow and supply dispatching methods and gas transmission schemes were undergoing optimization, as well. As a result, there emerged a sophisticated mechanism of debt settlement among all the market players, the region-by-region gas market pricing indication system and data bases of gas shipment route lengths. The E-Commerce Site largely contributed to building up gas production by new independent gas producers.
The experience shows that the auction trading efficiency was directly linked with the high stability of sales facilitating Gazprom the right to sell part of gas at market prices and providing independent gas producers with prompt access into Gazprom’s Gas Transmission Network for the adequate amount of gas to be marketed through stock market technologies.
Earlier, the Federal executives reviewed and amended various versions of the RF Government’s draft resolutions stipulating Gazprom’s sales of partial gas amount at contractual prices. However, there has been no practical solution to the problem until now.
Under a new draft resolution of the RF Government, the RF Federal Antimonopoly Agency is authorized to exercise control over the entire procedure.
Information Directorate, OAO Gazprom