Independent Gas Producers Were Left without Sales

By Ksenia Dokukina, Timofey Dziadko, Elena Mazneva

«Gazprom» Figured Out the Way to Prevent Gas Production Reduction. It became known to Vedomosti that gas purchases from independent producers have been suspended for indefinite period.

A letter of Gazprom with a warning that purchasing of other producers’ gas stops September 10th (Vedomosti posseses it) was received by independent producers last week. Gazprom is forced to undertake this measure due to significant reduction of gas consumption and the need to maintain a minimal production, the document specifies. They talk about the IV quarter.

A representative of Gazprom proved that today the company stops purchasing under the contracts from independent producers for indefinite period due to unstable demand in domestic market. This concerns only OAO Gazprom and doesn’t touch upon the purchases of other companies of Gazprom group, or transportation of raw materials of independent producers by the pipes of Gazprom as the company’s representative assures.

The list of those from whom Gazprom will not purchase gas includes Novatek. 42 mln cubic meters of gas daily remain to be not demanded, says one of the producer’s employee. According to Central Dispatching Department of Fuel Energy Complex (CDU TEK) for September 6th it’s almost 28% of the company’s production. The same person knows that Lukoil sells Gazprom 27 mln cubic meters of gas daily (60% of average production in August), and Sibneftegas (a joint venture of Itera and Novatek) — 8.6 mln cubic meters. Itera’s representative refused to give comments. The representatives of Novatek and Lukoil reported that they received Gazprom’s letter, but will avoid comments till the end of discussion with Gazprom.

And unofficially the employees of independent companies say that they are shocked: it’s just nonsense. It is the principle — take and pay — it’s a global principle adds the analyst of Nomos-bank Denis Borisov, the same the agreements of Gazprom in Europe work.

It’s not the first time when Gazprom saves at the cost of independent producers. In 2009 in the heat of crisis, gas production in Nakhodkino field of Lukoil dropped in comparison with 2008 for 28.6% due to reduction of Gazprom purchases, reminds Borisov. But Lukoil had no claims.

After the crisis Gazprom managers repeatedly stated that gas demand was resuming especially in Russia and promised that Gazprom shall update its peak production. However in January — August 2012 Gazprom production reduced also in comparison with last year and pre-crises level (by 2011 — minus 6.5%, according to CDU TEK, by 2008 — minus 14,4%).

Consumption is lower than of the previous year also in Russia as well as abroad. But Novatek till now has only increased production.

The main reason of Gazprom supplies reduction — recession in Europe and growth of competition, Borisov is sure. Director of East European Gas Analysis Mikhail Korchemkin considers competition to be the main reason.

Gazprom production reduction is connected exclusively with unsuccessful price policy, explains Korchemkin: in all markets, where there is even the slightest competition, Gazprom loses.

In Russia Novatek lured from Gazprom many industrial consumers — serious growth of supplies under new contracts is expected in 2013. So now considering reduction of sales to Gazprom — Novatek shall lose money — each day lost profit can comprise about 60 mln RUR, notes Korchemkin, for a month it should be about 1.8 bln RUR. And all independent producers can lose till the end of the year about $450 mln, calculated Borisov.

Independent producers can issue a claim for Federal Antimonopoly Service and court, say the companies’ employees. One of them states, that Gazprom contracts don’t anticipate its liability for refuse of purchases. But in court independent producers can benefit from the ban in unilateral refusal of agreement accomplishment, presented in a Civil Code, considers a lawyer, MGIMO professor Ilya Rachkov.

FAS doesn’t exclude that Gazprom’ actions can be qualified abuse with dominating situation, declared for Vedomosti a deputy head of the service Anatolij Golomolzin, but he restrained to give any forecasts: «If someone addresses us we shall deal with the situation».

Now hardly something can be done with Gazprom, Borisov is sure, and a long-term way out includes contracts with final consumers, the way Novatek follows.

A person, close to Novatek says that after the receipt of the letter, the company considers the possibility of full refusal of the contracts with Gazprom.
Translated by EuroDialogueXXI from Vedomosti