Russia is unlikely to end OAO Gazprom (OGZD)’s monopoly on piped natural gas exports after President Vladimir Putin removed curbs on LNG shipments abroad last year, domestic rival OAO Novatek (NVTK) said.
“We welcomed the liberalization of LNG export, but I don’t think this is going to happen to pipeline gas in the near future,” Russian billionaire Leonid Mikhelson, Novatek’s CEO and its largest shareholder, told reporters in South Korea. Gazprom’s monopoly may be reasonable to some degree because of its contribution to Russia’s economy, he said.
Gazprom, the world’s biggest gas producer, invests billions of dollars building and maintaining Russia’s mainline gas pipelines, carrying fuel from Siberian fields to Russia’s largest cities and beyond to customers in Europe. The Moscow-based company gets about 40% of its annual revenue of more than $150 billion from its gas-export business.
Gazprom’s average gas prices in Europe last year were almost four times higher than in Russia, the second-largest global gas market by consumption.
Mikhelson said that Gazprom explains its need to have export revenue to compensate the state-run company for higher gas extraction taxes than other producers have, and supplying a greater proportion of gas to households, which pay a lower price than industrial consumers.
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