Russia's Gazprom Sees Record 2016 Gas Exports to Europe

Reuters

ST PETERSBURG, Russia, May 26 (Reuters) - Russia's Gazprom plans to export a record 165 billion cubic metres (bcm) of gas to Europe this year, the company's deputy chief executive Alexander Medvedev told reporters on Thursday.

Gazprom generates more than a half its revenue in Europe and falling gas prices have made its gas more attractive to European consumers. It has also tweaked long-term deals with European clients, who have become more demanding thanks to rival sources of fuel, such as seaborne liquefied natural gas (LNG).

"We are going for a record," Medvedev said about expected gas supplies to Europe and Turkey this year.

Gazprom supplied about 159 bcm of gas to Europe in 2015, or about a third of the region's needs.

Medvedev did not give an explanation for the expected record. Last week, a Gazprom executive said it planned to produce 452.5 bcm of natural gas in 2016, up from 418.5 bcm last year.

Despite Gazprom's attempts to raise its exposure to the lucrative European Union market, some European countries have been trying to wean themselves off their dependence on energy supplies from Russia.

Medvedev said the average gas price for the year was expected to be $167-$171 per 1,000 cubic metres.

That price is broadly in line with average levels at Europe's main freely-traded gas hubs in Britain and the Netherlands, showing how Gazprom has sweetened its sales pitch to encourage consumption by customers, analysts said.

Gazprom's prices have typically been higher than the average level at European hubs.

A wave of competing supplies from LNG export plants in the United States threatens to undercut Russia's dominant share of European gas markets, which currently stands at 31 percent.

Analysts have predicted that Gazprom may try to sweeten its terms and pump more supply to Europe to hold onto that market share.

Medvedev also said he was against breaking up Gazprom's monopoly on gas exports to Europe via pipelines, because it would harm Russia's export revenues.

Gazprom has faced increased competition in Russia from Novatek and Rosneft, with its pricing policy constrained by government-imposed tariffs.

Both companies have been actively pushing the government to allow them to export gas to Europe via pipelines.

(Reporting by Vladimir Soldatkin; additional reporting by Nerijus Adomaitis and Oleg Vukmanovic; editing by Katya Golubkova and David Clarke)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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