The Russian Gas Road Show

"The Role of Russia in Ensuring the Energy Security of the World Economy"

That was the topic of a special session at GASTECH, as a Russian delegation of government officials and industry leaders staged a “road show” of sorts to showcase Russia’s strategic role as a reliable supplier of natural gas.

For delegation leader, Minister of Energy Alexander Novak, it was an opportunity to highlight a shift in government policy on the development of the gas industry.

Novak said that he wanted to indicate that Russia was "serious about creating a favorable investment climate” to move forward with increased gas production.

Indicating that the “state has changed its view and approaches” in partnerships between investors and Russia, the Minster spoke about a “new logic of state policy,” focused on encouraging investment that would include new incentives for development and beneficial treatment on taxation and export duties.

Of particular focus was in attracting investment for the development both of resources that are presently “unprofitable” and “harder to recover,  including deep bed and offshore.”

Novak outlined key elements of the draft legislation, including:

• fine tuned tax terms to ensure profitable developments of projects;
• differentiation of for regional clusters and different categories of oil and gas to provide appropriate risk/reward; and
• predictability for investors in ensuring a long-term guarantee of stability of the fiscal term.

The Minister was open in commenting that Russia was facing changing global gas market dynamics, which have undoubtedly facilitated the new policy approach, point to the role of shale gas and liquified natural gas.

“The Russian Federation is aware of technical advances in shale gas and the impact on US,” the Novak commented, continuing that he expected both the US and Canada to become exporters (and competitors) by the end of the decade.