Gazprom gas to be exported as LNG may be exempt from regulated prices
MOSCOW. Feb 7 (Interfax) - Gas from Gazprom destined for export as liquefied natural gas (LNG) would be exempt from state regulated prices under a draft government resolution prepared by the Energy Ministry that has been posted on the government website for draft statutory legal acts.
Under the resolution, "Beginning on January 1, 2017, Gazprom and affiliated parties are permitted to sell the natural gas they extract at unregulated prices: to organizations engaged in production of gas for export in liquefied form made from gas in gaseous form; and to organizations engaged in producing output for export from gas processing and gas-chemical facilities that entered service after January 1, 2017 as the result of investment projects in Russia."
"The proposed mechanism will make it possible to implement jointly with foreign partners high-tech LNG production projects that will make a substantial contribution to the development of Russia's gas industry and overall economy and provide a long-term source of budget revenue," according to the explanatory note attached to the draft document.
"Companies that supply product for export have a significant competitive advantage due to acquisition of gas at state-regulated prices, which is disadvantageous for gas suppliers and for Russia overall, due to the lack of an incentive for producers to sell to enterprises on the domestic market. Taking into account the proposed special mechanism for establishing prices in the framework of gas purchase and sale contracts supplied to export-oriented customers, it will be possible to balance the interests of gas suppliers and consumers and increase tax revenue for the budget. The given mechanism does not entail price growth above regulated rates for gas consumers on the domestic market," the Energy Ministry said.