Russia has adopted law introducing new long-term gas supplies principle

The State Duma adopted a law that introduced the concept of a “gas supply and gasification scheme for a constituent entity of the Russian Federation” and established the “take or pay” principle for long-term gas supplies.

Its adoption is necessary to increase the pace of social gasification and attract investors to gas processing and gas chemical projects.

The document clarifies the conceptual apparatus, particularly the term “gas,” introducing the concept of “gas supply and gasification scheme for a constituent entity of the Russian Federation,” and clarifies the powers of federal and regional gasification operators.

As Pavel Zavalny, Chairman of the Energy Committee, explained, the regulatory consolidation of this concept at the federal level will legitimize the measures developed in gasification schemes as a basis for forming regional gasification programs, considering best practices. It will ensure the consistency of the technical decisions made in regional gasification programs.

In addition, a new category of gas buyers with a preemptive right to conclude supply contracts is being established, namely Russian industrial consumers who intend to enter into a long-term gas supply contract on a “take or pay” basis. The Government of the Russian Federation will determine the categories; they will include, among other things, new industrial facilities for oil and gas refining and petrochemical chemistry and thermal and electrical energy production requiring long-term supplies of large gas.

“The development of “take or pay” mechanisms is necessary to conclude long-term contracts and assume mutual obligations as part of the implementation of investment projects in the field of gas chemistry where there are the necessary resources for this. Against the backdrop of a significant decline in gas exports, implementing projects for producing high-value products from gas is one of the most effective ways to monetize the released volumes of gas,” added Chairman of the Committee Pavel Zavalny.

Earlier, Bashinform News Agency reported that Russia is intensifying outreach efforts about citizens receiving subsidies for gasification.

Author: Sergey Nikolaev