Are you sure?

Gazprom defends export policies as sales plunge

Russia's Gazprom expected gas demand to pick up in Europe from April, its export chief said, rebuffing accusations that rigid pricing was to blame for an expected 40% plunge in export sales in 2009.

Alexander Medvedev told a news conference Gazprom, the world's largest gas firm, will export around 142 billion cubic metres to Europe this year, down from 184.4 bcm last year, with revenues from exports falling to $40 billion from $65 billion.

“When there is a global storm there is no safe haven anywhere,” said Medvedev, adding that the major impact on exports did not come from the crisis but from the fact that spot gas prices were twice as low as gas under long-term contact.

European customers, which get a quarter of their imports from Gazprom, have been buying more alternative fuels and cutting imports of gas under long-term deals, waiting until gas prices catch up with lower oil prices.

Medvedev said Algeria and Nigeria suffered from the same problem in the fourth quarter of 2008 and the first quarter of 2009 and only Norway had increased supplies.

“But we don't see any reason to panic or for pessimism,” said Medvedev, adding he believed Gazprom will boost its European market share in the future.

“Norway has no special flexibility. The structure of their price formula is such that the spot segment is prevailing,” he said, countering remarks by an energy ministry official this week that Gazprom should have been more flexible in its pricing.

“The advantage of our contracts is in price predictability,” he said.” It doesn't make any sense to halve prices to see offtake picking up by, let's say, 3%.”

“And starting from April we are seeing gas imports are beginning to exceed our expectations,” he added. (Reuters)