Gazprom doesn't give a damn about Russian citizens' needs

The government prefers to export gas, rather than provide it to the citizens.
Origin source
Gazprom has continued to increase the supply of gas abroad: for the first half of January, it increased by a quarter. But the domestic market seems to be not so interesting for the monopolist. And, judging by some of the statements of high-ranking officials and the circumstances in separate gas sectors, the company will continue to concentrate in efforts on export. This means that the citizens of the country with the world's largest natural gas reserves will have to continue to rely on other energy sources.

"From 1 to January 15, the export of Gazprom to far abroad counties has increased by 25.5% compared to the same period of 2016," said last week the company. Earlier monopoly reported that in the last year it "managed to reach a record high supply to Europe." Generally, in the past, the company updated some of its records, in particular concerning the export of gas to Germany, as reported personally by the Chairman of the Board Alexey Miller, and with regard to the excess project capacity of Nord Stream and so on.

In fairness it should be noted that Gazprom does not forget to pay attention to the domestic market. In particular, it promises to raise the level of gasification of the country by to 87% by 2030, up from the current 66.5%. But it seems to be just promises. Just look at how things are going with the "gasification system of vehicles", which was proclaimed a few years ago. As a result, gas exports remains almost the only way to monetize the produced natural resource.

Cars, but wrong ones

European countries have long been interested in the transition of road transport from petrol and diesel to natural gas. A recognized leader here is Italy: the country has more than 823 thousand cars running on gas, accounting for more than half of the total vehicle fleet equipped with a corresponding equipment in the Old World. Interestingly, with regard to the number of cars on the gas in Europe, Ukraine is the second: 170 thousand vehicles, followed by Germany: more than 96 thousand, Russia: 90 thousand, Bulgaria: a little less than 62 thousand. In total in Europe there are 1.4 million cars fueled by natural gas.

For the government, as the dynamics of foreign trade shows, an increase in the export of natural resource is vital. There's a network of approximately 4,200 filling stations. However, despite the seemingly impressive figure, they are still in a very low supply. Although everything is relative. For example, in Liechtenstein three stations accounted for 380 kilometers of roads, while in Russia, according to the Ministry of Energy a year ago, there were only about 250 filling stations. Five years later this number will double in the best case, but it is obvious that this would still not enough to the vehicle fleet.

But we know that the use of gas in 2-3 times more economical than gasoline or diesel fuel. As a result, spending on refurbishment of transport, and it costs an average of 20 thousand rubles for a passenger car, will be repaid within two years. In general, for an ordinary man in the street it is easier to wait until the final triumph of electric vehicles, which, according to experts, will come in 20 years, than to believe in the deployment of Russian filling network of the proper proportions.

Banning everything

Not much, apparently, Gazprom is interested in yet another problem: the gasification of Russian houses. According to the company, last year the Russian gas supply rate rose to 66.5%. Given the fact that this figure was 40% back in 1991, the gasification of the country has been going on with an average rate of just over 1% per year. If so, then Russia will be able to catch up with the developed and even some developing countries only in 30 years or so. Interestingly, meanwhile in Armenia and Kyrgyzstan the Gazprom subsidiaries are among the leaders in the energy industry. According to company forecasts, the level of gasification of Kyrgyzstan will rise to 60% by 2030, that is, with the pace of about 3% annually.

Against this background, the recent news, which caused a lot of noise, looks very interesting. Late last year, the head of Rostekhnadzo,r Alexey Aleshin, unexpectedly proposed a ban on the use of gas in apartment buildings. According to him, too many people were killed by domestic gas explosions. The head of the supervisory department proposed to replace the gas stoves with the electric ones.

Aleshin's initiative stunned not only specialists, but also ordinary citizens who understand nothing in the energy sector. It is obvious that the country's total transfer to electric stoves with concomitant replacement of wiring and an increase in generating capacity "will take decades." Not to mention the billions of dollars of investment. Suffice it to say that now in the Russian Federation the electric stoves are used only in 22% of the apartments. But knowing people believe that the proposal of the head of Rostekhnadzor was caused by the efforts of lobbyists rather than incompetence. The electricity producers might have an idea to push Gazprom on the domestic market, as the monopolist seems to be occupied by the gas export too much.

However, an opposite version has the right to exit: it is Gazprom itself which is interested in the degasification of the country, as it will free it from the obligations to build pipes to the most remote corners of the country, in order to achieve the notorious 87% gasification by 2030. That's why it is possible that after the Aleshin's report, the interested parties might come to some compromise: all-Russian program of gasification will undergo sequestration, some regions of the country will stick to energy resources more available to them, and the monopoly will focus on new records.

Everything on sale

Actually the government, as the dynamics of foreign trade shows, needs an increase in the export of natural resource. Firstly, it must compensate the budget revenues dropped because of the cheaper resources. "In view of the reduced average prices for oil and natural gas, oil and gas revenues decreased in 2016. Thus, in January - November they totaled 4.350 trillion rubles as compared to 5.411 trillion rubles in the same period of 2015," says the analyst of the Economic Expert Group, Ilya Prilepsky. That's why "the increase in the sales of hydrocarbons for the budget rather acts as a compensator for reduced prices," adds the chief analyst at Nordea Bank, Denis Davydov.

Secondly, the domestic economy continues to be the economy of the pipe. After all, oil and gas amount for at least 45% of the budget revenues. And the situation could be so desperate that Gazprom will have to shrink not only on the domestic market but also in abroad aimed pipelines. "If foreign demand will continue to grow, the [third-party suppliers] will be allowed to use the pipe," believes the analyst of Discovery Agent, Andrey Kochetkov. The same opinion is shared by the head of the analytical department of IK Rikom-Trast, Oleg Abelev: "So long the positions of Gazprom have been firm and steadfast, but I think that with the growth in demand for domestic gas NOVATEK's active lobby will voice its demands and break the monopoly of Gazprom for exports".

It is clear that in such circumstances the needs of ordinary citizens, whether they need gas for banal cooking or wish to have a gas filling at hand, are of little significance. Moreover, they pay for fuel slightly less than reputable foreign partners.

One quarter of the world's gas is Russian

Countries with the largest proven gas reserves, trillions of cubic meters:
1. Russia: 49.5 (24.6% of the global share)
2. Iran: 34 (16.9%)
3. Qatar: 24.5 (12.2%)
4. Turkmenistan: 9.9 (4.9%)
5. US: 9.6 (4.8%).
From the OPEC data