Russian market gas demand to grow faster than output

Energy Trade

Gas use may grow by 26 to 27 billion cubic meters in 2007 through 2009, a period when output is forecast to grow by 21 billion cubic meters, Economy Minister German Gref said yeasterday after a government meeting. State-owned OAO Gazprom, the world's biggest gas producer, was criticized in May by the International Energy Agency for not investing enough in reserves and infrastructure to able increasing demand for the fuel. Russia, which holds the world's largest gas reserves, supplies about a quarter of the European Union's needs in the fuel. „Gazprom will do everything to meet its export obligations,” Anna Yudina, an oil and gas analyst at Raiffeisenbank Austria's Russian unit in Moscow, said today by phone. „It's not profitable for it to sell at domestic regulated prices, so there will be some redistribution of supplies, where share of independent producers will increase in the internal market.”
Gazprom, which pumps about 90% of Russia's gas, plans to produce as much as 590 billion cubic meters of gas in 2020, up from 548 billion pumped last year, according to the company Web site. Gazprom delivered 307 billion cubic meters of gas to the domestic market in 2005, up from 305.7 billion a year earlier. „There are enough gas resources in Russia to meet solvent market demand,” Sergei Kupriyanov, a spokesman at Gazprom, said yesterday in an e-mail. „As long as gas is several times cheaper than alternative sources of fuel, there will be always shortfall for all willing” to buy gas. Russia's domestic demand may rise to 500 billion cubic meters in 2020, Mark Gyetvay CFO at Russia's second-largest gas producer, OAO Novatek, said last November. Gazprom will supply about 244 billion cubic meters, while 256 billion cubic meters will have to be met by supplies from central Asia and producers other than Gazprom, he said, citing estimates by Wood Mackenzie Consultants Ltd. (Bloomberg)

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