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The Merger of Gazprom and RAO UES and the New Gas and Electricity Pricing Patterns
National Energy Security Fund, November 2007, Pages: 45
Power industry reform is drawing towards completion. Despite the initial plans of its authors, we see that what’s coming is not as much reformation of the competitive market but rather emergence of a new gas & electricity giant that packs the strength of the gas monopoly and the vital importance of electrical power. Gazprom is already aggressively acquiring power generating units; following Aleksey Miller’s declared strategy to turn the gas company into a major energy corporation.
The main producer of energy feedstock is beginning to take over power producers and thus reshaping the fuel & energy industry of Russia. For Gazprom, this means new opportunities, for energy consumers – new risks. In the conditions of gas shortages in the domestic market Gazprom intends to pull off further reduction of gas consumption. During election wars and consequent political instability, the need to solve structure-related problems pales into insignificance and making competition for the country’s most important assets the only priority.
The new study analyzes Gazprom’s expansion in the power segment
- Gazprom’s energy strategy. "The quest for assets." Fighting for control of power business inside Gazprom.
- The problem of fuel supplies to power stations. Power units placement program. Long-term contracts. New pricingpattern. Risks for the economy of Russia.
- Acquisition of RAO UES’s assets. Gazprom’s financial difficulties. The patterns of cooperation with foreign companies. Gazprom’s struggle with other contenders for power generating units. Problems associated with the plans to take over SUEK.
- Forecast of further developments. The outlook on vertical monopolization of the power industry. The new gas and electricity pricing patterns.
Chapter 1. Gazprom's Strategy in the Power Industry. The Whys and Wherefores. Struggle for Control
1.1 Causes of Gazprom’s Expansion in the Power Industry
1.2 Gazprom’s Strategy in the Power Industry
1.3 Competition for Control of Electricity inside Gazprom
Chapter 2. Investments in Power Industry and Guarantees for Investors. Catering Fuel to Power Stations and New Pricing Pattern
2.1 Power Industry Development Stagnation. Where Do You Find Fuel and Money?
2.2 Gas Shortages and Increasing Domestic Demand: Obstacles to the Gas Scheme and to Construction of New Power Plants
2.3 New Gas Prices: Future Economic Growth
2.4. Long-Term Contracts in the Conditions of Monopolized Market
2.5 Difficulties in Synchronization of Gas Scheme and Commissioning of New Power Stations
Chapter 3. Acquisition of Assets and Gazprom’s Financial Hardships. Methods of Cooperation with Foreign Companies. JV with SUEK
3.1 What and How was Gazprom Buying in the Power Industry
3.2 Competition for Assets against Other Market Players: Chubais’s Small Victories
3.3 Acquisition of SUEK: Making Fuel Monopoly Stronger
3.4 Gazprom’s Financial Hardships
3.5 Power Industry Ambitions of the Gas Monopoly outside Russia
Chapter 4. Vertical Monopolization in the Power Industry: Benefits and Implications. Future Contour