Putin signs law to confirm Gazprom's monopoly http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-07-19T131137Z_01_L19348428_RTRIDST_0_ENERGY-GAZPROM-LAW.XML&rpc=66
Wed Jul 19, 2006
MOSCOW, July 19 (Reuters) - Russian President Vladimir Putin has signed a law that enshrines the monopoly over the country's gas exports of Gazprom (GAZPq.L: Quote, Profile, Research), the world's largest gas company, his office said on Wednesday.
Analysts have said the law may be designed to ensure Gazprom's status cannot be challenged on the basis of an international Energy Charter that Russia has signed but not ratified.
The law consolidates Gazprom's hold over gas exports, including piped natural gas, liquefied natural gas and liquefied petroleum gas -- butane and propane.
The only exceptions are existing production sharing agreements such as Exxon's (XOM.N: Quote, Profile, Research) Sakhalin-1 project and Royal Dutch Shell's (RDSa.L: Quote, Profile, Research) Sakhalin-2.
The announcement that Putin has signed the law comes shortly after a summit of the Group of Eight industrial nations in St Petersburg, where he played host for the first time.
A top theme on the agenda was energy security, which the European Union has said could be enhanced by breaking Gazprom's monopoly and allowing competition in the gas pipelines supplying Europe. Gazprom supplies a quarter of Europe's gas needs.
Gazprom also faces pressure from Central Asian states such as Turkmenistan and Uzbekistan, which are set to increase gas output over the next few years and become major exporters.
They can only sell to Europe through Gazprom's pipelines, giving the Russian monopoly power to act as a middleman.
To stop Gazprom being able to control the market, buying low from Central Asia and selling high in Europe, the EU had hoped Russia would ratify the Energy Charter Treaty and accompanying Transit Protocol, an international rulebook for energy trading.
Although Putin promised his G8 partners that Russia would respect the principles of the treaty, Russia has no plans to ratify it or to adopt the Transit Protocol.
Russia is a signatory to the Energy Charter, which means it is subject to its rules providing they do not contradict national laws such as the one Putin has now signed.
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