Gas prices in Russia must ensure financing of industrial investment projects - Gazprom

MOSCOW. Jan 23 (Interfax) - Gas sale prices must reach a level that ensures the financing of gas infrastructure development projects and the implementation of major investment initiatives, department head at PJSC Gazprom Alexei Sakharov said during a session on legislative regulation of budgetary, tax and investment activities in the fuel and energy sector.

The session was held by the expert council under the State Duma Energy Committee.

The session discussed current issues of budgetary, tax and investment regulation for implementing the Energy Development Strategy until 2050 (ES-50).

Sakharov advocates the inclusion of a corresponding statement in the ES-2050 draft. "The current level of regulated wholesale gas prices does not provide for the formation of financial resources in amounts sufficient to realize the required capital investment in maintaining and developing gas infrastructure in the interests of Russian consumers. Over the long term, this will inevitably affect the reliability of the gas supply and complicate investment decisions regarding gas infrastructure development and other key infrastructure projects," he said.

Sakharov also called for enshrining a course towards increasing transportation tariffs for independent gas producers in the Energy Strategy - "the establishment of economically justified tariffs for gas transportation services for independent producers."

"Tariffs for independent gas producers' transportation services have been frozen since 2015, which means PJSC Gazprom provides these services at a loss," he said.

The current average tariff for independent producers' gas transportation is 65.2 rubles per 1,000 cubic meters per 100 km, whereas the current cost of this service is 109 rubles, he said. To ensure the financing of new projects, the tariff must be raised to approximately 170 rubles. The prolonged freeze of transportation tariffs combined with the annual indexation of wholesale prices further increases the disparity in profitability between Gazprom's field development and that of independent gas producers.

On the other hand, head of the Energy Ministry's Gas Industry Development Department Artem Verkhov noted the alternative position of independent producers, who argue that the gas transportation tariff should be lowered because "at the current tariff level, there is no development of the gas transportation system."

Gazprom's proposals align with the key objectives set out in Russia's Energy Security Doctrine, which according to the law on strategic planning in the Russian Federation must be taken into account when drafting strategic planning documents, including the ES-2050 project, Sakharov said.