Novatek `Won`t Waste Time` Lobbying for End to Russia Natural Gas Export Monopoly

The CEO of Russia`s Novatek does not expect Moscow to lift Gazprom`s monopoly on Russian pipeline gas exports any time soon. Leonid Mikhelson saying late Tuesday that Novatek `won`t waste time` on lobbying the Kremlin for a change in policy.
Speaking at a press briefing in London. Mikhelson said Novatek would welcome a move to end the monopoly. which currently allows only Gazprom the right to export gas via pipelines.
But he said this was not a likely scenario at present.
`I can`t say we`re not interested. but at the current stage the issue is irrelevant.` he said. `We won`t get a positive result so we won`t waste our time on this.`
Instead. Novatek is focused squarely on starting and growing its LNG exports with the first train of its Yamal LNG plant set to ship its first cargo before the end of 2017.
Speculation has mounted in the past two years that the Kremlin was considering lifting the Gazprom monopoly for pipeline exports — especially via the planned eastern Power of Siberia route to China.
But to date. Moscow has insisted it has no plans to lift the monopoly. Analysts believe Moscow is concerned about a further fall in the European gas price should it liberalize gas exports. given a potential new flood of Russian gas onto the market.
In the past. state-controlled oil giant Rosneft — which has fast-growing gas production — and Novatek have both said they could target European markets if they could export gas via pipeline.
But in the search for new customers there is always the possibility that rival exporters could look to undercut Gazprom and sell gas to certain European customers at a discount.
This in turn would put pressure on the spot price and in turn certain parts of Russian non-oil-indexed long-term gas contracts. leading to lower export duty revenues for the state.
There is also a proposal under discussion in the Russian government — said to be supported by both Rosneft and Novatek — that would see more gas sold on the SPIMEX exchange in St Petersburg. with that gas then exported by Gazprom under an `agency` agreement.
In this scenario. Gazprom would still be the shipper of gas to Europe. although some of it would have come from Rosneft or Novatek fields.
Analysts see more likelihood of a shift in policy with regards to Gazprom`s planned 38 Bcm year exports to China via the Power of Siberia pipeline.
Rosneft — which produces associated gas in East Siberia — could be allowed to export through this link which could be underutilized in the initial years.
The pipeline is set to begin first flows of Russian gas to China by the end of 2019.

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