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. Last Updated: 07/27/2016

Gazprom Expected to Retain Dominance

Russia's talk of liberalizing its natural gas pipeline system to give independent producers access should not threaten Gazprom's dominant position at home or abroad, energy analysts said Thursday.


Gazprom, Russia's monopoly producer and the biggest gas company in the world, will reign unopposed over the domestic gas market for years, despite reformers' attempts to introduce more competition into the energy sector.


"Russia's gas export pipelines will be under Gazprom's control for the foreseeable future," said Stephen O'Sullivan, director of oil and gas research at MC Securities in London. "I don't expect any changes to the export regime in the near term."


Neither would Gazprom find Russian companies challenging it for export markets.


"If people try to take on Gazprom's export market, then I think they will be strongly resisted," said Jonathan Stern, vice president of Britain-based Gas Strategies.


Prime Minister Viktor Chernomyrdin signed a decree earlier this week outlining new rules on access to gas pipelines. But it is unclear when, or if, any changes will actually be implemented.


Gazprom accounts for 95 percent of total Russian gas production and all its exports of natural gas.


Russia's export pipelines are already close to full, and the handful of smaller domestic producers in existence would struggle to muscle in on what is a key hard currency earner for Gazprom and Russia as a whole.


Gazprom exported 123.5 billion cubic meters of gas to countries outside the Commonwealth of Independent States and Baltic countries in 1996, up 5 percent from 1995.


Its exports including those to CIS and Baltic countries were a huge 196.5 billion cubic meters.


Analysts said exports were likely to edge higher, possibly by 5.0 billion to 6.0 billion cubic meters annually over the next two years, as Gazprom squeezed through extra volumes.


The growth rate should pick up in 1999 as gas is pumped through sections of Gazprom's new Yamal-Europe pipeline, to be built in stages, linking major fields in Russia's Yamal peninsula to European markets.


Gazprom aims to transport up to 82 billion cubic meters through the pipeline when it is completed in 2010.