Viktor Baranov, MBNK
Release Date: 2010-08-09
Viktor Baranov, President of the Interregional Stock Exchange of the Oil-and-Gas Complex (MBNK), was interviewed by RussiaEnergy.net for Oil and Gas Financial Journal to discuss the history of MBNK, its role in the Russian oil and gas industry and his views on the current condition of the market.What was the interest of Russia to create its own commodity exchange in the area of oil and gas? Why did nobody come up with this idea before?
MNBK was created in 2002 as a gas exchange and in 2006-2007 it was planned to trade gas on this exchange. After that, Gazprom set up a temporary Working Committee for Development of Gas Trade. We suggested we could act as minor partners. As a result, there is an agreement among the MNBK, Gazprom and Gazprombank for a gas exchange.
The business environment was simply not ready for this before. As a matter of fact, this is rooted in the 70 years of Soviet history that conditioned the development of Russia and the people’s mentality in a very special way. Nevertheless, in spite of the fact that we have chosen to develop a new business environment it’s ridiculous to expect that we would accomplish it without proper management and a legal base. Unfortunately, the state is still waiting to have everything ready to press the ignition key. The current readiness is only 90% because there is no government decree that would allow Gazprom sell gas for a free price on the market.
Gas has always been a business for Russia even in the Soviet times. There are a lot of disputes concerning its price on the international market. What is your opinion and what impact you believe MNBK should have on it?
As for the pricing, I have always been critical about state regulation but, in my understanding, the prices should be formed (including the domestic market) through quotes. The stock exchange is not a ready-made solution but rather implementation of the world practice of looking at every day’s quotes. The ideology of gas exchange headed by Gazprom is based on this principle which concerns the international prices as well. The new gas exchange is about the international supplies: South Stream and Nord Stream can provide direct supplies of the purchased gas to the stock exchange without intermediaries.
What is the way to accommodate offer and demand?
Demand and offer are accommodated through the stock exchange to make the price transparent.
In 2007 the price of gas was USD 92/1,000 cu. m and USD 58 in Moscow. How are people going to buy via the stock exchange if the prices are higher here?
If we take a pure commodity platform as in the UK and in the U.S., you’ll see that the sales are linked with the possible transport capacity. Moreover, the pipeline’s capacity can be sold. In Norway, gas and pipeline access are always available on the market while in Russia it is experimental only. Strict volumes and capacities are allocated and these factors could still influence even at the peak demand of gas.
It takes different players to have a trade platform operating. What is the situation with the small gas players in general? It is difficult for our foreign readers to understand if Russia wants independent gas players or not.
According to a famous Churchill’s expression, a bad politician had never been radical and did not become liberal. In the dawn of Soyuzgaz (2001), when I was working in Arcticgas, the industry was not engaged. Soyuzgaz was responsible for forming a private subindustry. As a result, we’ve got the Union of Independent Gas Producers – a non-commercial organization for lobbying the interests of independent gas producers. Now the small ‘kids’ have grown and have their pipeline in place, solid partners, a platform and a stock exchange is almost there – what else is missing? These companies make their own decisions for their lobbying and their financial capabilities.
Primarily, the independent gas producers are necessary for competition. Now that we have a private gas subindustry independent from Gazprom, I’m not aware of the situation with these companies and I have no impact there. At the same time, there are limits for trade and access which is not positive. Monetarily wise, the profits of private gas companies and the limits they are facing are incomparable. We need to change the access and ensure maximum independence because the business is moving. At the same time, we want to look at the other side of the Moon and we want to know who’s in control? Who bought the shares? Who owns what? Unfortunately, the legislative base also needs to be changed.
Are there any chances to continue the development?
2010 is a crucial year to show the results. The winner is the one who manage to organize a forward market that would suit both the industrial and special agents.
| Company: | MBNK |
| Position: | President |
| Country: | Russian Federation |