29 Sep 2009 15:04

Putin urges careful approach to gas market liberalization

MOSCOW. Sept 29 (Interfax) - Russian Prime Minister Vladimir Putin said a careful approach was needed to gas market liberalization.

"You can expect this, please do!" Putin said, asked whether investors could expect privatization in the gas sector.

"It's not a silly question. In Russia like everywhere we see the negative side of excess monopoly in one area or another, and gas is no different," he said.

The negative symptoms, Putin said, included excess administration, the lack of due flexibility in the market and restraints on the growth of independent producers. Then there's corruption. "It's there at Gazprom too," he said.

"We're thinking of how to counter these threats," he said.

The government will be aiming to provide equal access to gas infrastructure, Putin said. "Although there are certain difficulties to do with falling demand in times of crisis here as well," he said. Freeing up access to pipelines would entail growth in gas output, and that could bring world prices down, he said.

"There are some dangers. We'll be moving in this direction, but carefully," Putin said.

Free access to pipelines would be good for the consumer because it would push prices down, but it would not be so good for the state, Putin said at the VTB Capital investment forum.

But "ultimately we are aiming to liberalize" the Russian gas market," he said.

"The monopoly on export sales will be preserved. Not for ever, of course, but certainly for the short-to-medium term," he said.

The export monopoly needs to be preserved because the state has to assure the consumers of Russian gas that Gazprom is capable of supplying that gas. "There are a lot of factors here that require us to be careful," Putin said. Gazprom has long-term contracts, and needs to guarantee returns "so there can be no quick decisions," he said.