RUSSIA INCREASED SHARE
Russia has the capacity to target volumes over prices in its natural-gas sales, replicating Saudi Arabia's oil strategy, according to state-owned Vnesheconombank's chief economist.
Saudis compete with other crude suppliers by boosting oil production and cutting prices, Andrey Klepach of VEB, as the state bank is known, said Friday. "We could play the same role in gas as we have the capacityfor boosting gas exports and production," he said in the Siberian city of Krasnoyarsk.
Struggling with its longest recession in two decades amid a slump in oil prices, Russia is testing worst-case scenarios as it develops long-term strategies for energy, its main money-making industry. Gas supplies to Europe may be priced close to the lows seen in 2005 for the next decade. according to the Energy Ministry in Moscow's "stress" scenario.
Russia has increased its dominance in Europe's gas market, where it meets 31 percent of demand as crude's plunge made oil-linked prices more attractive. While the battle for customers is expected to intensify on rising liquefied natural gas supplies, including from the U.S., Gazprom said earlier this month it saw no need to change policy and start a "price war."
"Russia will have to struggle for its market share one way or another," said Andrey Polischuk, an oil and gas analyst at Raiffeisenbank AO in Moscow. Gazprom is gaining market muscle due to low oil now but may need changes to keep the price in line with competitors when crude rebounds, he said. The exporter won't cut prices as deeply as the Saudis have let oil fall and will probably stick to greater reliance on spot prices or easing take-or-pay obligations for clients, like it did about five years ago, according to Polischuk.
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