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Putin signals end to Gazprom's Russian gas export monopoly
June 21, 2013 / 1:54 PM / in 4 years

Putin signals end to Gazprom's Russian gas export monopoly

MOSCOW (Reuters) - Russian President Vladimir Putin signaled the gradual end of state-controlled Gazprom’s (GAZP.MM) monopoly on exports of natural gas, opening the way for rivals Novatek (NVTK.MM) and Rosneft (ROSN.MM) to compete for huge new Asian markets.

The company logo of Russian natural gas producer Gazprom is seen on an advertisement in front of the White House in Moscow February 8, 2013. REUTERS/Maxim Shemetov

He made the announcement minutes after Novatek (NVTK.MM) signed a deal on Friday to supply at least 3 million tonnes of liquefied natural gas (LNG) annually to China.

China National Petroleum Corp (CNPC) also agreed to buy a 20 percent stake in Novatek’s $20 billion Yamal-LNG project in northwest Siberia.

“We offer to lower restrictions gradually on liquefied natural gas exports,” Putin said in a speech at an economic forum in St Petersburg, adding that the demand for the frozen gas in the Asia Pacific region was growing rapidly.

The move would be a blow to Gazprom, which now has a monopoly on exports of both pipeline gas and LNG under a 2006 law, and which is itself planning a major expansion in sales to Asia because its European markets have been stagnating.

Gazprom announced a plan to build a new LNG facility on the Baltic Sea.

The right to export gas is important to Novatek’s plans to set up the LNG plant in Yamal together with France’s Total (TOTF.PA) and CNPC.

Novatek currently has 80 percent of the project and Total 20 percent. The Russian company has said it would retain at least 51 percent in Yamal LNG after new partners join it.

Under current arrangements for the project, Gazprom had to be involved as an exporting agent and its role was not clear. Novatek has been postponing investment decision for the project as it has not been able to secure exporting rights.


Russia, the world’s second largest gas producer after the United States, exports the bulk of its gas via a pipeline network to Europe where demand is weak due to a slowing economy.

Novatek and the country’s top oil producer Rosneft (ROSN.MM) are both lobbying for LNG export rights, with the latter agreeing with ExxonMobil (XOM.N) to build an LNG plant on Russian Far East estimated at $15 billion.

On Friday, Rosneft agreed to sell 1 million tonnes of LNG to Japan’s Sodeco and 1.25 million tonnes to Marubeni, respectively, from 2019. Swiss oil trader Vitol VITOLV.UL has also signed a preliminary agreement to buy LNG from Rosneft.

“The strong demand for LNG in Japan and other Asia Pacific region countries, which has been observed in recent years, provides wide opportunities for Rosneft’s new LNG project in the Russian Far East,” Rosneft said in a statement.

Reporting by Katya Golubkova and Tim Heritage; Editing by Anthony Barker

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