Russia's Gazprom Responds to Competitors

Russia's state-owned natural gas giant, Gazprom, announced Sept. 10 that it was immediately suspending purchases of natural gas from independent producers in Russia, citing unstable demand on the domestic market. Gazprom accounts for roughly 80 percent of Russia's natural gas production and operates the majority of the country's pipeline networks, including all of Russia's export pipelines. This means independent firms have to sell the majority of what they produce to Gazprom for transport and sale on domestic and international markets. This arrangement essentially allows Gazprom to dictate how much natural gas other Russian firms can produce.

There are reasons to doubt Gazprom's official explanation for the decision. The announcement comes at a time when forces both inside and outside Russia are trying to curb Gazprom's monopoly in Russia's domestic market and in foreign exports. Gazprom seems to be sending the message that it can still counter the domestic firms attempting to undercut its monopoly.