Federal Energy Commission presents new gas strategy

The Russian government will consider the concept for the development of the domestic natural gas market at a meeting on December 19, 2002, the press service of the Federal Energy Commission reported. Prior to this meeting, the Federal Energy Commission proposed new principles for the gas market, namely the establishment of the Federal wholesale gas market, consisting of two sectors, regulated and non-regulated. The regulated sector will fully provide gas supplies at prices set by the Federal Energy Commission to residents, budget organizations, heat generating companies, the housing and communal sector and some other consumers. Priorities for gas supplies to the latter group of consumers will be given to companies with the most economically effective use of gas.

Resources of the Federal wholesale gas market will consist of Gazprom's gas supplies as well as supplies from independent gas producers and imports. Gazprom's supplies to the non-regulated market will directly depend on supplies by other gas producers to this sector. According to the proposals of the Federal Energy Commission, prices in the regulated sector of the Federal wholesale gas market will consist of the cost of gas production and transport tariffs, set by the Commission. This transport tariff should be equal in both sectors of the Federal wholesale gas market and covered only by gas consumers.

Gazprom will have the functions of an organizer, system operator and administrator in the regulated sector while the administrative function will be assigned to a non-commercial organization to be set by Gazprom together with large gas suppliers and consumers in the non-regulated sector.

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