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Last Updated: Wednesday, 5 July 2006, 12:59 GMT 13:59 UK
Duma approves Gazprom export bill
Gazprom logo
Gazprom is looking at expanding into Europe
A bill confirming state-owned gas giant Gazprom's monopoly of exports has been approved by Russia's lower house of parliament, the Duma.

The bill stipulates that Russian gas exports run through state-owned pipes - all of which are Gazprom's.

Gazprom controls all of Russia's gas export pipelines and 90% of production.

News of the bill will worry European Union officials, who have been pushing for Russia to give firms greater access to its gas fields and export pipelines.

They hope that greater competition would result in lower European gas prices.

The EU also thinks that liberalising Russia's gas market would prevent supply disruptions like the one seen earlier this year when Gazprom's supplies to Europe were hit by a pricing dispute with Ukraine.

Energy Charter

Russia has signed up to the Energy Charter, an international agreement that spells out the terms of energy cooperation between eastern and western Europe.

But it has refused to ratify it because the EU wants access for Central Asian states and other countries to Russian pipelines, which Moscow says will make their natural gas 50% cheaper than Russia's when it arrives in Europe.

In its final version, the bill refers to "gas" instead of just "natural gas", which analysts suggest could give Gazprom a monopoly on exports of liquefied natural gas (LNG) and liquefied petroleum gas (LPG).

Gas transit plant near Kiev
About 80% of Russia's European gas exports pass through Ukraine

It allows two exceptions to Gazprom's monopoly - for the production-sharing agreements on the eastern island of Sakhalin involving Exxon Mobil and Royal Dutch Shell - as their terms cannot be changed.

The gas issue is likely to be top of the agenda at next week's G8 summit of leading industrialised nations, being hosted by Russia in St Petersburg next week.

"The move is a clear signal to the European Union that Russia will do things on its own terms, and does not bode well for the July G8 summit," said Adam Landes, chief energy analyst at Renaissance Capital.

The gas export law still needs to be approved by the Federation Council, the upper house of Russian parliament, and signed by President Vladimir Putin.

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