Transcript ENERGY POLICY OF RUSSIA - UNITN | Giurisprudenza

ENERGY POLICY
OF RUSSIA
INTRODUCTION
Russia, one of the world's two energy superpowers, is rich in natural energy
resources. It has the largest known natural gas reserves of any state on earth,
along with the second largest coal reserves, and the eighth largest oil reserves.
Russia is the world's fourth largest electricity producer after the USA, China,
and Japan.
Russia exports 70% of oil produced, making it the world's leading net energy
exporter as well as a major supplier to the European Union.
PRIMARY ENERGY SOURCES
GAS In recent years Russia has identified the gas sector as being of key
strategic importance. The share of natural gas as a primary energy source is
remarkably high compared to the rest of world. Russia has the world biggest
natural gas reserves, mainly owned and operated by the Russian
monopoly Gazprom, which produces 94% of Russia's natural gas production.
OIL Russia is the largest oil producer in the non-OPEC countries, and second
biggest in the world after Saudi Arabia. The biggest Russian oil company is
Rosneft followed by Lukoil, TNK-BP, Surgutneftegaz, Gazpromneft and Tatneft.
All oil trunk pipelines (except the one) are owned and operated by the stateowned monopoly Transneft; oil products pipelines are owned and operated by its
subsidiary Transnefteproduct.
COAL Russia has the world’s second largest coal reserves, with 157 billion
tonnes of reserves.
ELECTRICITY PRODUCTION Russia is the world's fourth largest electricity
producer after the USA, China, and Japan. Roughly 63% of Russia's electricity is
generated by thermal plants, 21% by hydropower and 16% comes from nuclear
reactors. Russia exports electricity to the CIS countries, Latvia, Lithuania,
Poland, China, Turkey and Finland.
RUSSIAN ENERGY STRATEGY
The Energy policy of Russia is contained in an Energy Strategy document,
which sets out policy for the period up to 2020
The Energy Strategy document outlines several main priorities:
- an increase in energy efficiency
- reducing impact on the environment
- sustainable development, energy development and technological
development
- improved effectiveness and competitiveness
So no it’s clear why Russia has tried to purchase a controlling stake in
pipelines, ports, storage facilities, and other key energy assets of the
countries of central and eastern Europe. Russia needs these assets to
transport energy supplies to Western European markets, as well as to secure
greater control over the domestic markets of the countries of the region. For
instance, in several cases where energy infrastructure was sold to nonRussian firms, Russia cut off energy supplies to the facilities.
ENERGY CHARTER TREATY
There is a mutual dependence between Russia and the European Union. On the
one hand, some EU countries, many of them in central and eastern Europe, are
dependent on Russia for most or all of the oil and natural gas they consume.
Moreover, EU countries are likely to become more dependent on natural gas
supplied by Russia in the future, as deposits in the North Sea decline. But on the
other hand, Russia’s economy is heavily dependent on oil and natural gas exports.
And because of state monopoly in majority of energy companies these questions
are controlled by the Russian Government and President.
The Energy Charter Treaty is an international agreement which provides a
multilateral framework for energy trade, transit and investments. Russia signed the
document in 1994, but flatly refused to ratify its current revision.
The Treaty framework includes the transit protocol, requiring Gazprom to permit
third-party access to its export pipeline network. And it has been the main vehicle
through which the Europeans have tried to get Gazprom to open up both its
contracts and its networks to the same kind of regime. So Russia understands it
and is not agree to ratify the Treaty.
GAZPROM.
THE VIEW FROM INSIDE
WHAT IS GAZPROM?
OAO Gazprom (English - Open Joint Stock
Comlany Gazprom) is the largest extractor
of natural gas in the world and the
largest Russian company.
Gazprom is unique for enjoying the advantage
of being simultaneously an energy producer
and supplier owning a potent resource base
and a manifold gas transport infrastructure.
Due to Russia's geographical location, the
Company has the potential to become
an energy “bridge” between the European and
Asian markets by supplying its own natural gas
and providing gas transit services for other
producers.
A BIT OF HISTORY
The history of “big gas” in the Soviet Union began in 1946
upon commissioning of the Saratov – Moscow gas trunkline.
Large natural gas reserves discovered in Siberia and
the Ural and Volga regions in the 1970s and 1980s enabled
the Soviet Union to become a major gas producer. Gas
exploration, development, and distribution were centralized
in the Ministry of Gas Industry, which was created in 1965.
Under the leadership of the Minister of Gas Industry Victor
Chernomyrdin, the ministry transformed itself into State Gas
Concern Gazprom, which became the country's first statecorporate enterprise. The company was still controlled by the
state, but now the control was exercised through shares of
stock, 100% of which were owned by the state
In 1993 the Concern laid the foundation for setting
up Gazprom Russian Joint Stock Company, which was
renamed in 1998 as Gazprom Open Joint Stock Company.
PROCESS OF PRIVATIZATION
In 1992 the organization became a jount-stock company and started to
distribute shares under the voucher method: every Russian citizen
received vouchers to purchase shares of formerly state-owned companies.
By 1994, 33% of the Gazprom's shares had been bought by 747,000 members
of the public, mostly in exchange for the vouchers. 15% of the stock was also
purchased and allocated to Gazprom employees. The state retained 40% of
the shares, but the amount was gradually lowered to 38%. Anyway the Russian
government has still had a control under the company till now.
Trading of Gazprom's shares was heavily regulated, and the by-laws of the
company prohibited foreigners from owning more than 9 percent of the shares.
SUPPLYING GAZ TO EUROPE
Gazprom is one of the primary suppliers of natural gas to European consumers and
accounts for roughly one third of aggregate gas imports to Western Europe.
Today Russian gas is supplied to 31 countries inside and outside the FSU.
* Gas sales to Europe in 2008, bcm
SUPPLYING GAZ TO BALTIC STATES AND CIS
In 2008 gas sales to the CIS and Baltic States accounted for 96.5 billion m3. The
biggest gas volumes are delivered to Ukraine, Belarus and Kazakhstan.
Country
Ukraine
Sales volume
56,2
Belarus
21,1
Kazakhstan
9,6
Lithuania
2,8
Moldova
2,7
Armenia
2,1
Latvia
0,7
Georgia
0,7
Estonia
0,6
* Gas sales to the CIS and Baltic States in 2008, bcm
TERMS AND CONDITIONS OF EXPORTING GAZ
Gazprom exports gas to Central and
Western Europe mainly under long-term, up
to 25-year agreements concluded as a rule
based on intergovernmental agreements.
From the Gazprom’s point of view, longterm arrangements are the basis for steady
and reliable gas supplies. Only long-term
deals can guarantee the producer and
exporter returns on multibillion dollar
investments in major gas export projects,
and assure steady and uninterrupted gas
deliveries for the importer in the long term.
Long-term agreements with the key
customers typically contain a “take or pay”
provision, meaning that the customer
agrees to pay for a certain minimum
amount of gas even when a lesser amount
was physically used.
PRICE FORMATION FOR EUROPEAN COUNTRIES
The price level for European consumers depends to
a considerable extent on the cost of gas
transportation services. Gazprom sells its gas at the
border of the importing country to local distributors,
who then supply it to consumers. The end-consumer
price includes the cost of gas transportation via low
pressure pipelines, the maintenance of which is
several times more expensive than in Russia, and
taxes.
The Company’s international business activities are
carried out in full compliance with the legislation in
force in the countries of Gazprom Group’s operation.
Recent changes in the European Union legislation
aimed at liberalization of the gas market influenced
both organizational issues of the business activities
and contracts for gas supply to the EU member
states. Executing the new regulations Gazprom’s
companies removed the restrictions imposed on
reselling the Russian blue fuel from the contracts.
PRICE FORMATION FOR CIS AND BALTIC STATES
In 2006 Gazprom completed a transition to the market based price setting principles
for gas consumers in all of the CIS and Baltic countries. As a result, gas prices for
the CIS region have grown two-threefold and are gradually reaching European
levels.
At the same time, when building price offers for each country, consideration is given
to a degree of its integration with Gazprom’s gas business. Special attention is paid
to developing market based cooperation with the major countries transiting Russian
gas to Europe – Ukraine and Belarus.
POLITICAL COMPONENT IN RELATIONSHIPS
Because of the price formation questions the relationships
between Gazprom and Belorussian and Ukrainian
governments are quite difficult. There were some conflicts
when Russia stopped transporting gas to these countries or
Belarus and Ukraine switched off the gas and oil transition
trough their territories. So European countries suffered
although they meet their paying obligations.
Gazprom belongs to the so-called national champions; a
concept advocated by former Russian president Vladimir
Putin, in which large companies in strategic sectors are
expected not only to seek profit, but also to advance
Russia's national interests. For example, Gazprom sells gas
inside Russia considerably under the global market price as
a form of subsidy to the public.
Now it’s clear why such kind of conflicts are solved with the
taking part presidents of the countries in negotiations. And
that’s why the debts questions are controlled in the higher
official level in Russia and of course in Ukraine and Belarus.
THE NORD STREAM PIPELINE
From this point of view the constructing the new gas pipeline under the Baltic
sea is extremely significant. There are no transit countries for Nord Stream.
This eliminates any possible political risks and reduces Russian gas
transmission costs.
In addition, there is an increasing of natural gas demand in the European
market. Due to a direct connection between the world’s largest gas reserves
located in Russia and the European gas transmission system, Nord Stream
will be able to satisfy about 25 per cent of this extra demand for imported gas.
In this regard, back in December 2000 the European Commission had
assigned the Nord Stream project the Trans-European Network (TEN) status
which was confirmed once again in 2006. This means Nord Stream is a key
project aimed at creating crucial cross-border transport capacities with a view
to ensuring sustainability and energy security in Europe.
In April 2010 the Nord Stream gas pipeline construction was launched in the
Baltic Sea. To be completed in 2011, construction of the first pipeline string
will be immediately followed by the second string. In 2012 the second string
will reach the German coast near the town of Greifswald. The whole length of
the pipeline will be 1,224 kilometers.
SOME MORE FACTS ABOUT GAZPROM
The gas production volume of the company is around 14.5%
of the global total. In 2009 the Group produced 461.5 billion
cubic meters of natural and associated gas, 10.1 million tons
of condensate and 31.6 million tons of oil.
Gazprom owns the world's largest gas transmission system trunklines length exceeds 160.4 thousand kilometers.
As of December 2008 the total number of Gazprom Group’s
personnel equaled 376.3 thousand people. The core business
companies dealing with production, transmission, underground
storage and processing of gas employed 221.3 thousand people.
Gazprom is the largest joint-stock company in Russia. The total
number of the Company’s shareholders is over 500 000.
Financial highlights for 2008:
- Gazprom’s earnings (net of VAT, excise and other taxes) RUB
2,507 bln
- Gazprom’s net profit RUB 173 bln
- Gazprom’s capital investments (net of VAT) RUB 264 bln
FAS CONTROL OF THE MONOPOLY
Federal Anti-Monopoly Service of Russia is an authorized federal executive
power body responsible for prevention, restriction and suppression of
monopolistic activity and unfair competition. FAS Russia executes functions on
developing and introducing legal acts and draft federal laws of its competence,
control and supervision over competition at commodity markets, protecting
competition at financial markets, control over the activity of natural monopolies
and supervision over advertisement.
On the one hand, FAS tries to control quite strictly the activities in monopolies
and in Gazprom in particular. For example, last week it was news that the Service
will not ask the Court to decrease the fines for overpricing for two companies
Gazpromneft and Lukoil if they will not confess their infringement of antitrust law.
Also FAS usually gives it’s agreement for acquisition new companies by
Gazprom, like it was in the case with MosEnergo (huge Russian energy
company) a few years ago.
But on the other hand this control from FAS is quite formal, because the
monopoly and the Service are subordinated to the government. Moreover, energy
policy is prioritized in Russia so “energy questions” usually are solved in the
highest level. Thus anyway the last word will be said by Russian president but not
the Federal Antimonopoly Service.
THANK YOU FOR ATTENTION!
Prepared by Liubou Zhauniarovich