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The Wall Street Journal: Putin Signs Law That Confirms Gazprom’s Export Monopoly

A WALL STREET JOURNAL NEWS ROUNDUP
July 20, 2006

 

President Vladimir Putin signed a law that enshrines the monopoly over Russia’s gas exports of OAO Gazprom, the world’s largest gas company, his office said.

 

Analysts said the law may be designed to ensure that Gazprom’s status can’t be challenged on the basis of an international Energy Charter that Russia has signed but not ratified.

 

The law consolidates Gazprom’s hold over gas exports, including piped natural gas, liquefied natural gas and liquefied petroleum gas — butane and propane. The only exceptions are existing production-sharing agreements such as Exxon Mobil Corp.’s Sakhalin I project and Royal Dutch Shell PLC ‘s Sakhalin II.

 

Although Mr. Putin’s government earlier made Gazprom the official “coordinator” of gas exports from Russia, it had never formalized its export monopoly until a sharp deterioration in relations with the European Union this spring over energy markets.

 

The EU is pressing Russia to ratify the Energy Charter. That would oblige Russia to give equal and nondiscriminatory access to its pipelines to third parties, whether those be independent producers in Russia, or Central Asian countries using Russia as a transit country. Russia says that the charter is out of date and that opening up its export pipelines would jeopardize its ability to meet gas-delivery obligations.

 

The dispute has been made more complex by Gazprom’s decision to pursue acquisitions downstream in Europe’s gas and power markets. Russian government officials say it is being shut out of the higher-value EU market for political reasons.

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