OSW Studies

Russian Gas Industry - Current Condition and Prospects

The current condition of the gas industry is one of the most crucial factors influencing the Russian state·s functioning, internal situation and international position. Not only is gas the principal energy resource in Russia, it also subsidises other sectors of the economy. Status of the main European gas exporter strengthens also Russia's importance in the international arena.

Available information concerning the Russian monopoly gas company Gazprom shows that, ten years after the fall of communism, the company is not in good shape. Contrary to what is often said, it is not true that Gazprom is risking a total collapse of production. It is furthermore likely that the company, even without major reforms, should be capable of maintaining its current production levels for several more years. However, if Gazprom is to become a dynamic enterprise able to face the challenges of the growing Russian and Western markets, it needs investment and reforms. Therefore lifting Gazprom out of its current crisis appears to be one of the most important tasks for the Russian government. The efforts made to that end will decide, to a great degree, the economic situation in the Russian Federation and its position in Europe.