Expert describes what the NG market should not be like

20 april 2016

The Analytical Center helped organize another national oil and gas forum in Moscow. Speaking at the plenary discussion Target Gas Market Model, the Head of the Department for Strategic Studies in Energy, Alexander Kurdin, noted that there is no consensus in the expert community regarding the issue and so it would make sense to first “agree on acceptable development options; in other words, we have to decide what we definitely do not want to see in the NG market.”

Mr. Kurdin believes that we cannot afford to keep putting up with nation-wide and regional monopolies (because of high entry barriers in the NG market). Regional and industrial differences in regulation (including in pricing) must not affect competition, especially by supporting unprofitable companies and restricting access to energy sources. At the same time, Mr. Kurdin thinks that the idea to abandon price regulation in the NG market that has been suggested by some experts is too ambitious. Instead, some kind of a price corridor should be imposed.

“Another thing we do not want to see happening is a decline in the activity of NG sector suppliers as a result of NG companies scaling back their operations and ordering less industrial products. In fact, we have got to set up ‘no-go zones for regulators’, areas that simply cannot be touched,” Mr. Kurdin said.

The expert also noted that as the market model is being reformed gradually, a feedback mechanism should be put in place and adjustments to policy should be made on a periodic basis.

National Oil and Gas Forum is a federal-level event organized by the Russian Energy Ministry in conjunction with leading business and industry associations.