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“Gazprom” gas transportation to the Customs Union has been unprofitable since 2014

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“Gazprom” gas transportation to the Customs Union has been unprofitable since 2014

“Gazprom” gas transportation to the Customs Union has been unprofitable since 2014
July 21
16:00 2016

Gazprom Deputy Head of Department 817 Vasiliy Smirnov said that the sales profitability of gas transportation services within the borders of the Customs Union in 2014 had left in a minus since 2014. Mr. Smirnov made this statement at the “round table” with the Analytical Center for the Government of the Russian Federation. The item on the agenda was “Targets and barriers for the competition development at the Russian gas market”. According to Mr. Smirnov, the profitability in 2012 was 1.2%, in 2013 – 1.1%, in 2014 the index turned negative – “minus 2.4%” in 2015 – “minus 2.2%”.

“Taking into account the refusal of the tariff indexation for gas transportation for independent producers from July 1 this year, the profitability will fall sharply”, – said Mr. Smirnov. However, he did not make predictions to what point it will fall. The Deputy Head of the Division for Coal and Natural Gas Industries, FAS, Maxim Timofeev during the round table said that wholesale gas prices hadn’t been increased by 2 percent from the first of July due to technical reasons. At this time a new version of the document has been ready. It will allow reconsidering the prices from September and October. “Yes, indeed, the increase in wholesale gas prices from July 1 did not happen, but this is due to technical issues caused by the volatility of fuel oil and gas oil prices at foreign markets”, – said Mr. Timofeev.

“Now a new version of the document is available. It will help reconsider the prices in September and October”, – he said. Maxim Timofeev explained the journalists that the period during which quotations were registered would be changed. The one-month lag instead of the lag of nine months will be installed. It will be done to bring the ratio of the cost increase to two percent. Speaking at the “round table”, the official noted that the question of the tariff increase for gas transportation in the current year also remained relevant and was being considered at the FAS. The Department considers that the minimum possible level of the increase is now equal to 2%. According to Mr. Timofeev, at this time the changes of methods of tariffs formation are being developed now. This is done in order to avoid questions from the independent producers about Gazprom costs accounting for transportation.

Speaking to the press, Mr. Timofeev said that according to the protocol of the meeting with Deputy Prime Minister Arkady Dvorkovich, “we must introduce independent gas producers to the Consumer Council as the members of the Board and develop a new technique (tariff formation). And if these activities are executed, then we will return to the tariff change later”. However, he did not make predictions from what time tariffs for gas transportation can be raised.

“Yet there is an order of the Russian government to keep the tariff unchanged till December 2016. But for the FAS, as a regulator, this issue is relevant. Calculations objectively show that there is a need to change”, – pointed out the official. According to the agency, the growth in 2% is the minimum of the necessary growth, which is restricted by the forecast limits of the socio-economic development of the Russian Federation.

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