Tatarstan becomes 14th region of Russia to sign regulatory contract in gas sector

The new mechanism is aimed at targeted development of the natural gas transportation and distribution system in the Russian regions

Tatarstan becomes 14th region of Russia to sign regulatory contract in gas sector
Photo: Maksim Platonov

Exchange Trading in the Oil and Gas Industry scientific and practical conference took place in Kazan. Organised by Tatarstan Office of the Federal Antimonopoly Service (OFAS) of Russia, it gathered interested participants — representatives of the regional Office of Antimonopoly Service of Russia, Tariff Committee of the Republic of Tatarstan, Ministry of Industry and Trade of the republic, large consumers of natural gas, oil and gas companies, power generation companies. Andrey Tsarikovsky, the state secretary and deputy head of the Federal Antimonopoly Service of Russia, attended the conference. A regulatory contract was signed within the conference. Read the details in the material of Realnoe Vremya.

Andrey Tsarikovsky: “We rarely sign regulatory contracts”

Andrey Tsarikovsky, the state secretary and deputy chairman of the Federal Antimonopoly Service of Russia, called his visit to Tatarstan short in time but extremely eventful and fruitful. In the morning, he met with President of Tatarstan Rustam Minnikhanov, whom he congratulated on the successful completion of the election campaign and the new election to such a responsible post.

In the first half of the day Andrey Tsarikovsky was received by President of Tatarstan Rustam Minnikhanov. Photo:

Later, in the building of the Cabinet of Ministers of the Republic of Tatarstan in the presence of Prime Minister of Tatarstan Aleksey Pesoshin and Deputy Director General of TAIF JSC for Energy and Information Technology Ruslan Gizzatullin signed a regulatory contract in the gas sector. Their signatures under the document was put by Deputy Head of FAS Russia Andrey Tsarikovsky, Deputy Prime Minister of Tatartsan — Minister of Industry and Trade of Tatarstan Albert Karimov, Director General of Gazprom Mezhregiongas Kazan JSC Rinat Sabirov, Director General of Gas Transportation Company PLC Valery Sazanov.

The signing of the regulatory contract in the gas sector took place at the government House of the Republic of Tatarstan. Photo:

Later, Aleksey Pesoshin and Andrey Tsarikovsky took part in the scientific and practical conference. During the break, the deputy head of the Federal Antimonopoly Service of Russia found time to talk to journalists.

“Tatarstan has become the 14th Russian region where a regulatory contract was signed. We rarely sign regulatory contracts, and only after a very long study. The signing take place only in cases when we clearly see that this money will be used for specific development of networks — specific development of gas supply in the territory of this subject," Tsarikovsky stressed the importance of the event.

Andrey Tsarikovsky: “Tatarstan has become the 14th region in Russia where a regulatory contract was signed.” Photo: Maksim Platonov

Regulatory contract — the mechanism of infrastructure development

For an explanation of the necessity and essence of the regulatory contract, Realnoe Vremya turned to the direct participants in the signing — Deputy Director General of TAIF JSC for Energy and Information Technologies Ruslan Gizzatullin and Director General of Gas Transportation Company PLC Valery Sazanov.

“The regulatory contract in the field of gas supply — a mechanism that allows you to ensure the development of infrastructure: gasification. Within the framework of the current legislation of the Russian Federation, we have several mechanisms that allow us to carry out gasification of consumers. Taking into account the task clearly set by the country's leadership to accelerate gasification, we must use all the tools provided by the state. The regulatory contract allows funds to be allocated to specific projects in a targeted way, ensuring their payback and return on investment to investors. At the same time, without placing an additional burden on consumers themselves, especially on the population," said Ruslan Gizzatullin.

Ruslan Gizzatullin: “The regulatory contract gives the opportunity to ensure the development of gas supply infrastructure without increasing the tariff burden on consumers.” Photo: Maksim Platonov

He also explained that the mechanism for setting special surcharges to gas tariffs for the final consumer is one of the main mechanisms used in the territory of the Republic of Tatarstan for gasification of consumers and the population. However, this mechanism is quite difficult to apply when it is necessary to build large distribution networks with a large capacity of billions of cubic metres per year and a long length. Such networks are usually required for gasification or improving the reliability of gas supply to large industrial enterprises.

“If you just create a special surcharge to the tariff for the construction of such distribution networks of high capacity, which require high construction costs, this may put an additional burden on the population and other consumers. But the task is exactly the opposite: to contain the growth of tariffs for the population, but at the same time, to ensure the growth of gasification and gas consumption in the regions of Russia. The regulatory contract proved to be an effective tool for resolving the issue. Under the contract, the gas transportation company has committed to build a gas pipeline with a capacity of up to 4 billion cubic metres. Besides, Gas Transport Company has obligations to ensure unhindered access to supply natural gas to industrial enterprises connected to this pipeline. Gazprom has obligations to provide volumes of gas, including exchange-traded volumes, for its transportation to consumers connected to this pipeline, and, accordingly, the FAS of Russia has obligations to form tariff solutions that allow all this to be implemented," Gizzatullin explained in accessible language the mechanism of operation of the signed contract.

Valery Sazanov: “We are creating an independent gas transmission network connected to the Gazprom system.” Photo: Maksim Platonov

“This contract allows us to participate in solving the problem of increasing natural gas consumption in the Republic of Tatarstan and in the Russian Federation as a whole. We are creating networks that help solve issues within the region with the continuous supply of natural gas to new production facilities, with increasing the reliability of gas supply facilities," Valery Sazanov stressed.

Aleksey Savelchev: “Exchange trading in oil should be considered in relation to the markets of gas and raw materials for petrochemicals”

The agenda of the scientific and practical conference turned out to be also intense. Deputy Minister of Industry and Trade of Tatarstan Aleksey Savelchev noted in his speech at the plenary part of the forum the need for cross-development of instruments of Russian commodity exchanges. In particular, he expressed the opinion that for greater efficiency and balance, the exchange trade in oil should be considered in relation to the gas segment that is actively developing in both the fuel and raw materials sectors. Besides, the deputy minister is sure that it would be correct to link these financial instruments with other markets, namely the markets of fuel and raw materials for the petrochemical industry.

Aleksey Savelchev: “It is necessary to link the instruments of commodity exchanges with related markets.” Photo: Maksim Platonov

The generating company of TAIF Group also had its own proposals. Director General of TGC-16 JSC Eduard Galeev noted that the company he heads has been one of the major players in gas exchange trading on Saint-Petersburg International Mercantile Exchange for more than five years. During this time, TGC-16 bought 7% of the total volume of natural gas sold through auctions. Being also an active member of the exchange committee under the FAS of Russia, the generating company made a number of proposals to increase the liquidity of exchange trading.

For example, TGC-16 was proposed to reduce the volume of the lot in the instrument for purchasing gas “for a day ahead” and “for a non-working day” from the current 10,000 cubic metres to 1,000 cubic metres. This will both increase sales and reduce the volume of failure to take gas, which is beneficial for both buyers and sellers. Besides, the company offers to consider the possibility of reducing the discount on unbalanced volume of natural gas by one and a half times. According to the generating company, a tool that gives the opportunity to purchase natural gas for several months in advance would be extremely popular.

Eduard Galeev: “The proposals of TGC-16 to increase the liquidity of exchange trading in natural gas are currently being considered by the FAS and the government of the Russian Federation.” Photo: Maksim Platonov

“We hope that commercial balancing of exchange-traded gas will be launched, which will allow reselling the volumes of gas failed to take. This will make it possible to increase the volume of purchases of exchange-traded gas, and if it is not purchased, it will avoid fines. Our proposals are currently being considered by both the FAS and the Russian government, and we hope that they will be implemented," Eduard Galeev said in his speech.

During the sessions that continued the scientific and practical conference, participants also discussed such topics as Current Trends in the Search, Exploration and Development of Oil and Gas, Current Trends in Oil and Gas Geology and The Ways to Improve the Efficiency of Production of Hard-to-Recover Reserves.

By Arseny Favstritsky