Anatoly Golomolzin: state-by-stage deregulation of wholesale prices for gas should encourage a sustainable growth of market capacity in general
The first joint meeting of the Working Groups on executing the Action Plans on implementing the pilot project on changing state regulation of gas prices in the Khanty-Mansiisk Autonomous District – Yugra and the Tyumen region took place on 22 September 2016 in Khanty-Mansiisk. The membership of the Working Groups is approved by FAS orders.
Attendees included representatives of FAS, the Yugra Government, the Government of the Tyumen region, “Gazprom” PJSC as well as representatives of independent gas producers and consumers.
The WGs discussed state-by-stage deregulation of wholesale gas prices and reached a coherent position of all representatives present at the meeting on the issues under discussion. The main items on the agenda were: using market price indicators for natural gas, directing tariff policy under the frame of the pilot project and improving the system of contractual relations between market participants.
In a welcoming address Deputy Governor of the Khanty-Mansiisk Autonomous District – Yugra, Dmitry Shapoval, pointed out that the project is based on abolishing government regulation of wholesale gas prices and a transition to market prices and changing the tariff-setting approaches on gas transportation. He pointed out that Yugra is on the first place for oil extraction and electric power generation and the second place for gas extraction. In the past year extraction of associated petroleum and natural gas in the District reached 34.8 billion м³; of which 33.9 billion м3 of associated petroleum gas, and 0.9 billion м³ of natural gas. The share of natural gas in the total volume is 2.8%. The Action Plan provides for ongoing analytical and practical work towards its implementation.
Deputy Head of FAS Anatoly Golomolzin said that market price indicators in the pilot project will be exchange quotations, off-exchange price indices and indices of foreign comparable markets. It is expected that from Q1 2017 the scope of monthly sales of natural gas through exchange trading will be no lower than 3 billion м³; at the same time the principle of regularity and evenness will be observed. A transition to the single tariff for natural gas transportation for both “Gazprom” PJSC and independent companies will be achieved. In the meantime long-term transportation tariffs (from three to five years and longer) will be set.
“Gas buyers and companies from the group of persons of “Gazprom” PJSC expressed their readiness to form relations on a long-term as well as short-term contractual basis, including exchange contracts. The success of the project can be evaluated in view of the outcome of creating favourable pricing conditions, particularly, preventing an unreasonable growth of gas prices. One can state that the project is a success if gas consumption increases and gas supply expands. It must be noted that the costs of gas for the population remain regulated. There is no goal to increase or reduce shares of particular economic entities, the main project objective is a sustainable growth of market capacity in general”, emphasized Anatoly Golomolzin.
Alexei Rybnikov, the President of “SPIMEX” JSC stressed that exchange trading is one of the important elements of developing the natural gas market: “It is necessary to ensure further steady advancement of technologies and tools of electronic trading, enable producers and consumers to create a system of market relations on the gas market. Today 6 producers and 62 suppliers purchase gas regularly through the exchange. The project will expand the range of participants, involving the economic entities operating in Yugra and the Tyumen region”.
Director of the Tyumen Regional Department for Tariff and Pricing Policy, Evgeny Kartashkov also supported members of the Working Group emphasizing the importance of the project, particular within the Tyumen region: “In the past years prices at the exchange have been 5-8 % below the regulated prices. Reducing the cost of gas under the frame of the project at least for 5 %, consuming 5 billion м³ of gas in the Tyumen region, will give a 850 million RUB effect, that can be explained by reduced consumer costs, decreased costs of goods / services in the secondary infrastructure or increased investments of energy companies”.
Summing up the results of the meeting, its participants agreed with the proposed measures and the project implementation procedure. A decision is made to publish draft normative legal acts devised to implement the project on the official web-site http://regulation.gov.ru/, exchange materials between members of the Working Groups and adopt a new format of meetings - twice a month - in order to successfully launch the project in 2017.