Russia’s Gazprom Says “There’s Enough Gas For Everyone”

Created: 01.12.2006 13:21 MSK (GMT +3), Updated: 16:45 MSK

MosNews

Russian state-controlled gas monopoly Gazprom said on Thursday, Nov. 20, that although it would have to import increasing volumes of Central Asian gas to meet its commitments to European customers, there will be no shortfalls in supply.

Sergei Kupriyanov, spokesman of the Russian monopoly, indicated that despite fears of supply squeeze, Gazprom intended to increase its exports to Britain and to “strengthen its position” on the British market. “It is clear that with the increase in demand for UK gas imports, our participation in the market will increase,” Kupriyanov was quoted as saying by the Guardian.

Gazprom, which owns one-sixth of the world’s natural gas, pipes 30 percent of its output to Europe and provides around 4 percent of Britain’s gas supply. But there have been growing indications that its declining gas fields and failure to invest in new exploration and production could squeeze output, threatening shortages.

One source close to the company said there were fears of a shortage next year was quoted by the British paper as saying: “The company has lots of contracts with lots of customers in Western Europe, Belarus and the UK and has to find new fields to replenish old ones.”

Officially, executives insist there is enough gas for everyone: the headline on the latest company monthly magazine is “Khvatit na vsekh” (“There’s enough for everyone”).

Explaining situation with Gazprom’s deliveries, the company’s spokesman said: “This is not about a shortfall of gas, it’s about a shortfall of cheap gas.” Domestic gas prices in Russia are currently below production costs. Last year, Gazprom lost 8 billion rubles ($296 million) on its domestic gas business. Kupriyanov was quoted as saying: “We must get to the point of liberalizing gas prices in our country. If we get to a stage of equal prices for domestic and foreign markets it will influence decisions by customers.” Russian authorities promise to double domestic prices by 2010, but increase next year will only amount to 14-15 percent.

The gas giant’s representative said that meanwhile imports of cheaper Central Asian gas will grow. From Turkmenistan alone, Gazprom plans to more than double imports over the next four years to as much as 80 billion cubic meters — around 14 percent of its own output.