MOSCOW: Gazprom, the world’s largest natural-gas producer, is raising investments to $69bn through 2009 to develop new fields amid concerns the company may not meet soaring demand in Russia and Europe.
Management approved an expanded investment budget this week because the company wants to speed up development of natural gas fields on the Yamal Peninsula, a key area for the Moscow-based company’s future production growth, chief financial officer Andrei Kruglov said today in an interview in London.
“If before the main accent was on the development of the gas transport system, pipelines, now it is on the development of gas fields,’’ Kruglov said. “New gas from these fields should enable sufficient financial flows to cover investment needs.’’
Gazprom, which supplies a quarter of Europe’s gas, is buying more fuel from Central Asian gas to meet soaring demand at home and in Europe.
Russia, which holds more than a quarter of the world’s gas reserves, may face fuel shortages at home because low, regulated prices discourage investment in production or on energy-efficient equipment and housing.
Gazprom has no specific plans to buy Centrica Plc or to bid for the assets of Russia’s bankrupt Yukos Oil Co, Kruglov said.
“Depending on what options there are and what will be coming up we will be reviewing specific cases,’’ he said when asked about Centrica and Yukos. As for Yukos, “we are not aware of any dates that have been officially announced about the auction.’’
Gazprom chief executive officer Alexei Miller has called Centrica, Britain’s biggest energy provider, an “interesting asset.’’
The company this month said it will develop the $20bn Shtokman field itself, spurning offers from five Western producers including Chevron Corp and Total SA to exploit the country’s biggest untapped natural-gas deposit.
President Vladimir Putin is seeking a bigger share of output for state companies in Russia, the world’s largest oil and gas producer.
“If it’s possible to develop fields ourselves, we’ll do it,’’ Kruglov said. “It’s far more profitable and creates additional financial flows which don’t have to be shared with anybody.’’
Profit may surge as much as 60% next year to between 430bn ($16bn) and 460bn rubles, from an expected 288bn rubles this year, based on Russian accounting standards, Kruglov said.
Some of the profit will go to investors as dividends as well as to capital expenditures, he said.
Gazprom shares fell 0.7% on Friday to $10.78 as of 4.04pm in Moscow, extending Thursday’s 1.4% slide on the Russian Trading System after the company announced its spending plans.
Moscow-based Deutsche Bank UFG was among the brokerages to say the spending forecast was higher than expected, which could limit cash flows and erode value.
Kruglov planned to meet investors on Friday to explain the investment programme. “I hope the relevant explanations will be accepted,’’ he said.
The company’s investments will surge 43% next year to 531.8bn rubles as it adds financing for field work to planned construction and maintenance of pipelines and storage facilities, Gazprom said on Thursday.
Investments over the next three years will amount to $69bn, including $55bn on capital expenditures.
The company aims to develop the Arctic Shtokman gas field, the Bovanenkovskoye and Kharasaveiskoye fields in the Yamal peninsula as well as the Yuzhno-Russkoye field, which the company is developing with BASF AG and E.ON AG and where production may start by 2008.
Gas from Shtokman and Yuzhno-Russkoye will be shipped to Europe through a pipeline being built under the Baltic Sea directly to Germany, avoiding intermediary countries such as Poland and Ukraine. The investment programme includes 90bn rubles a year over the next three years to build the Nord Stream pipeline, which is scheduled to open in 2010.
Gazprom is to delay production of liquefied natural gas from the vast Arctic Shtokman deposit in the Barents Sea, a senior company official was quoted as saying yesterday.
“The LNG project at Shtokman will be carried out after 2013 when the Shtokman deposit itself will be launched,” Interfax news agency quoted deputy CEO Alexander Ananenkov as saying in the central Russian city of Ufa.
Gazprom had earlier said an LNG plant at Shtokman would go into operation in 2011.
Gazprom this month announced it would be developing the field independently, abandoning years of planning to share the world’s biggest undeveloped gas field with two or three foreign partners able to bring technology and expertise.
Located in icy seas 550km (340 miles) off the coasts of Russia and Norway, Shtokman is a giant field which has reserves of around 3.7tn cu m of gas.
Discovered in 1988, the field was meant to be put on stream as early as 2000, but the project has been repeatedly postponed as Gazprom lacked funds and was unable to agree with Western companies on the financing. – Agencies |
