The Oil Drum is slowly waking up to what UBS refers to as a tight supply/demand scenario. Further to your comments on Gazprom. Given that I live and breathe this stuff every day some thoughts;
At the bottom I have summarized the arguments, nothing new, just note that the consumer who suffers is the Russian exporting industry, not your warm London, or Moscow, for that matter, apartment.
Vladimir Milov, the Politkovskaya of Russia's energy industry (uncomfortable truths, rather than female and dead) believes that Gazprom's state-sanctioned monopolistic behaviour (the link leads to a PPT pres) will cause a significant short fall in gas production.
The counter argument is that gas price liberalization will cause independents, Novatek, and the vertically integrated oil and gas companies, LUKoil et al, to fill the domestic gap and that domestic industry will invest to use more energy more efficiently.
To which Milov et al, argue that as GAZP controls UGGS (pipelines) you can shift the price as much as you like but GAZP will seek non-market rents (bribes) to sell gas at that price. Thus wellhead net backs will remain below actual local market prices. And he is right. Price liberalization means nothing without releasing other parts of the system - mostly UGGS.
To which the optimist camp (me) would argue, without foundation, that the one thing that the 5th Directorate Thugs are truly frightened of is the Narod (the “People”). If your Russia interest stretches beyond European gas shortages, the most significant event of early 2006 was the entirely botched reform of pension entitlements to travel. At least one Thug has read Paine - I defy you to agitate a man on a full stomach. Gas will be provided to heat our apartments whatever the economic cost.
Having said that UES has been preparing the press all summer for power cuts due to gas, Milov's graphs are partially UES inspired. If we get a cold snap (-25) I would not bet against an eastern spalny raion (dormitory region) of Moscow or the business centre suffering a complete power, but not heating, outage.
The risk is that rent-seeking (corruption) moves too slowly to understand what the Narod really feels. To the extent there ever was a Putin, the Good Tsar, he is too isolated to understand, or care.
Anyone for a heating revolution?
The arguments in short, though you have read this before;
Big Gazprom fields are in decline
Gazprom keeping production flat with mid-size fields and acquisitions
Gazprom's next big fields will not come on stream until 2015 at the soonest
European demand is growing
Russian demand is growing faster
The US wants its disproportionate share of the world's energy
Supply from Central Asia (generically referred to as Trashcanistan) is filling the gap but the pipeline infrastructure needs $2-3bn of upgrade capex to provide the supply in 2+/- years
Where TOD's analysis falls down are the economics, and again you have heard this before.
Gazprom's sales to Europe (old not new) are approximately $240 per thousand cubic meters (mcm)
Regulated domestic prices are $41/mcm (net back equivalent price ~ $58/mcm)
Unregulated prices are around $69/mcm (net back equivalent ~ $128/mcm)
There is a clear economic argument in favour of Gazprom meeting its export obligations.
[composed and posted with ecto]