Putin Mulls End of Gazprom Monopoly Pipeline Gas Sales to China

Posted by George Backwell
Tuesday, July 22, 2014
Gas pipes, valves: File photo

The Russian government should consider allowing gas producers other than Gazprom to export gas from new fields in east Siberia and Far East, Vedomosti daily newspaper said, citing an order from President Vladimir Putin.

Russia's Gazprom has a monopoly right to export gas via pipelines, clinching a $400 billion deal to ship gas to China over 30 years in May.

Russia's top oil producer Rosneft, led by CEO Igor Sechin, promised to take Gazprom to the court if it refuses to allow other producers to ship gas via the planned 'Power of Siberia' pipeline, which should also bring gas to Russia's remote eastern regions.

Citing an order recently signed by Putin, Vedomosti said that the government should consider opening up exports from eastern gas fields for firms other that Gazprom and their participation in infrastructure construction by September 1.

By then, the central bank and the government should also decide if Gazprom should be recapitalised to finance the construction of 'Power of Siberia' and the development of fields which Putin suggested last month. Total costs were previously estimated at $55 billion.

"We view this development as neutral for Rosneft, and negative for Gazprom, as this move may increase worries on the risk of challenging Gazprom's monopoly in its regular westbound direction," Alfa Bank said in a note, referring to Gazprom's gas sales to Europe.

Last year, Rosneft and Novatek got a right to ship sea-borne super cooled gas out of Russia, breaking years-long Gazprom monopoly.

(By Katya Golubkova)

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