SPIMEX delays Russian gas index launch to 2017

Ekaterina Kravtsova

27-Oct-2016

The creation of a Russian natural gas index which may bring transparency to the market has been delayed until next year, Alexei Rybnikov, president of the St. Petersburg Mercantile Exchange (SPIMEX), told ICIS in an interview.

Russia has started to actively develop its own pricing for both oil and gas this year, with some observers describing it more a political gesture showing Russia’s power and independence in the energy sector rather than a push for more competition.

SPIMEX and the country’s antitrust authority, the Federal Antimonopoly Service (FAS), say that for a market where most gas is traded in long-term contracts with prices classified, the index would be beneficial. Especially if developed together with an index on gas traded on the exchange and an export netback price.

An index for gas traded on the bourse is still expected to be launched this year, Rybnikov said, adding that there will be a separate reference price for each of the four delivery points currently in use.

Off the exchange, the bourse and the watchdog are also discussing the creation of several reference prices rather than one to better reflect the range of gas values across the country. Regional indices may be tied to local network points that in the future can become virtual hubs.

“At the moment, we are waiting for information from different gas distribution plants,” Rybnikov said, explaining the delay with the launch of the index.

In order for the index to be created, SPIMEX started registering deals occurring off the exchange in January. The majority of those deals are those done by Russia’s independent producers, such as Novatek and Rosneft, as gas major Gazprom has to sell gas out of the bourse at a price set by the government.

Next year, FAS intends to liberalise gas prices in three Russian regions, with more contracts included in index formation. The market may be fully liberalised in the next three years, according to the watchdog.

Foreign interest

Gas indices are also expected to make the Russian market more accessible for foreign companies. According to Russian media reports, Gazprom said it looked forward to creation of the indices at the SPIMEX, referring to the matter in the context of its export auctions for gas delivery to Europe. Gazprom Export declined to comment on how the indices may be used in those auctions.

Last year, Gazprom considered conducting its first gas export auction on the SPIMEX platform but later decided to hold it and two other auctions by email.

Asked if Gazprom may hold its fourth auction – which is planned for spring – via SPIMEX, Gazprom Export said “various options were being considered”, but declined to comment further.

Foreign companies had the right to take part in SPIMEX trading earlier this year, and used the opportunity to access oil trading on the Russian bourse.

Rybnikov said SPIMEX constantly receives enquiries from major European traders on gas trading on the bourse, but none of them has taken part in those trades yet. “The major reason is that Gazprom holds the monopoly on gas exports from Russia, while independent producers take part in SPIMEX gas trading too,” he said. ekaterina.kravtsova@icis.com

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