Rosneft: To Form Rosneft Gaz to Compete with Gazprom?

State-owned Rosneft plans to spin off its gas business into a subsidiary, Forbes reported citing sources aware of the situation.According to the sources, the new subsidiary will be named Rosneft Gaz. Vlada Rusakova, head of Rosneft gas business, is expected to be appointed director of the new company.She started her career in Rosneft in April 2013 and previously worked in Gazprom for many years. Since 2003 Rusakova has been a member of the board for Gazprom.A Rosneft representative refused to comment on the possible creation of the gas offshoot.One of the sources explained that “the idea to spin off company’s businesses has been discussed.”

While Rosneft CEO Igor Sechin has not presented the idea for examination yet, the initiative has serious lobby support, a source told Forbes.Rosneft is Russia’s third-largest gas producer, after Gazprom and Novatek. According to its financial data, in 2014 the company produced 56.7 billion cubic meters of gas. Profits surged by 72 percent compared to 2013, to 165 billion rubles ($3.2 billion at the current exchange rate).

Rosneft plans to increase gas production to 100 billion cubic meters by 2020, Sechin said.

The idea to spin off Rosneft’s gas business may be a sign that the company is preparing for the revocation of Gazprom’s monopoly to export gas via pipelines, Mikhail Korchemkin, head of East European Gas Analysis, believes.

According to the analyst, the revocation of Gazprom’s monopoly is a way to overcome restrictions laid out in the Third Energy Package. A Rosneft subsidiary would be able to fully use the OPAL gas pipeline (an offshoot of the Nord Stream pipeline).”The full use of OPAL is the fastest and least expensive way to reduce gas transit via the Ukrainian territory,” he said.

 

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