The Russian gas market will be undergoing a transformation over the course of the next 6-12 months. Renaissance Capital has released a new study on the industry outlining its prospects for the year, and urged investors to closely watch the coming developments. In the near to medium term, Russian gas producers are expected to strengthen their ties with Asia, while regulation amendments, currently being discussed, should shake up the industry, improving its profitability and attractiveness. 

At present, one of the key issues weighing heavily on the sector is the tax and royalty regime for geographically challenging areas. Statoil’s exit from the Shtokman project clearly highlighted this problem. Continuing to maintain high levels of tax collection is important for the political regime; however, it impedes the development of many next-generation fields, as investors remain wary and prefer to avoid Russia.  MORE