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Gazprom to increase Europe sales, gas price

Russia’s top gas company Gazprom expects to ramp up its sales to Europe and increase average gas price by 14% on the back of fuel demand recovery amid improved economic situation on its prime market, Reuters reported.

Two sources familiar with the company's plans told Reuters on Friday that Gazprom is set to increase gas exports to Europe – where it feeds a quarter of total gas demand – to over 152 billion cubic meters in 2011 from around 140 cubic meters in 2010.

The average gas price for Europe, the main source of revenues for Gazprom, will rise to $352 per 1,000 cubic meters in 2011 from some $308 in 2010.

Gazprom's prices in long-term contracts with European customers are pegged to oil prices, which have recently shot above $100 per barrel to reach two year-highs.

Many EU customers were asking Gazprom to include a spot price element into the long-term agreements, a proposal met with discontent by the Russian gas exporting monopoly.

The sources also said the company plans to produce 505.6 cubic meters of gas in 2011, less than the 508.6 cubic meters it extracted in 2010, according to the Energy Ministry data.

But the firm looks to increase output to 531.4 cubic meters in 2012 and to 558.3 cubic meters in 2013 – to outstrip pre-crisis levels, the Reuters wrote.

In 2009, when the weak global economy lowered gas demand and new unconventional gas supplies in the United States boosted supply, Gazprom saw its production sink to record lows of 461.4 cubic meters, off 16% from the 550 cubic meters it produced in 2008. (BBJ)