Gazprom with world’s largest reserves of natural gas still holds 7th position in worlds top oil and gas companies. Due to environmental concerns, Energy security policy consumption of alternate energy sources are expected to rise in future. Still substitutes like coal, gas, wind power, solar power, nuclear energy, Electric vehicles etc are less developed, currently threat of substitutes is medium. Domestically threat of substitutes is low But In EU – 28 there was a tremendous increase in share of renewable and nuclear energy due to the disrupted supply of gas. But recently growth of renewables (6.9% ) and nuclear energy(6.6%) in Russia was noticed. There has been a decline in share of Global CO2 emission (4.5%) due to higher share of natural gas. Share of natural gas in primary energy consumption is 52% in Russia. But with the Gazprom’s monopoly in gas transmission system the bargaining power of buyer is low. It gives customers different supplier options. PJSC Gazprom sells the natural gas at prices which are fixed by government whereas the independent producers sell at price agreed by transacting parties. In 2015, China’s CNPC signed 30 year gas supply contract with gazprom after the negotiation on price for about 10 years. Higher bargaining power is with the buyers who consume oil and gas in enormous amounts for example China, Japan ,India. Due to high cost of switching, Power of supply is Mediumĭue to the nature of this industry the bargaining power of buyers is relatively small. Recently the demand in EU for natural gas from Russia has increased and New projects have been initiated like Nord stream 2 and Turk stream to ensure supply security. With the decline in domestic production, it will be very difficult to search for new partners, constructing new pipelines. With the concern of Energy security, It would require high cost for switching supplier if European countries suddenly decide to not take gas from Russia. The demand of natural gas is increasing in EU – 28. With International and National law restrictions and volatility of oil and gas prices it will be difficult for new entrant to sustain and that is why the entry barrier is high. Due to economies of scale it is easier for vertically intergrated companies to compete. Government holds more than 50 % share in Gazprom, involvement of government in any matter might lead to political instability and geopolitical conflicts. National Oil companies control more than 90% of the oil and gas reserves. This Industry is capital intensive in nature.
Fields of Gazprom group with the largest reserves are Bovanenkovskoye, Urengoyskoye, Shtokman, Yamburgskoye, Astrakhanskoe, Kovyktinskoye, Zapolyarnoye, Kharasaveyskoye, Chayandinskoye, Kruzenhternskoy, Severo – Tambeyskoye. Fields which are largely producing the natural gas are Urengoyskoye, Zapolyamoye, Bovanenkovskoye, Yamburgskoye, Orenburgskoye, Yuzhno- Russkoye. Gazprom holds leading position with 33.1% of share of gas sales to European gas market. In Russia, Gazprom group’s HC production assets are 151 development fields, 7441 producing wells of Natural gas, Design capacity of treatment units and integrated is 1119.6 bcm. As at December,2016 Gazprom’s proved and probable reserves of natural gas were 23,855 bcm. In Russia, the Length of the pipeline is around 172,000 Km. Around 622.3 bcm of gas is transported in Russian GTS network. Gazprom globally leads in terms of capacity of natural gas transportation system and length of pipeline. Gazprom group holds 72% Russian and 17% global reserves. The share of natural gas production in Russia stands 66% and globally 11%. It remains as a leader among global public and Russian companies. Gazprom holds largest resource base in the world with global leadership in the production capacity.
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