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Gazprom confident gas consumption upward trend to remain in Europe — CEO

May 26, 19:24 UTC+3 ST. PETERSBURG
Gazprom increased gas supplies to Europe by 8% to 159.4 bln cubic meters last year, boosted supplies to Europe by 18% from the year beginning to May 15
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© ITAR-TASS/Alexay Filippov

ST. PETERSBURG, May 26. /TASS/. Gazprom is confident the gas consumption growth trend will remain in Europe and is ready to satisfy it, Chief Executive Officer of the Russian gas holding Alexei Miller said on Thursday.

Gazprom increased gas supplies to Europe by 8% to 159.4 bln cubic meters last year, Miller said. "The European economy needs gas, internal production in the European Union declines and this trend will continue," he said. Gazprom boosted supplies to Europe by 18% from the year beginning to May 15, he added.

Natural gas consumption is also growing in China, Miller said. Deliveries to China surged 22% in the first quarter of 2016, including pipeline gas import by China up 26% and LNG import up 16.9%, he added.

Export price 

The annual average export price of Gazprom for gas in 2016 could reach $167-171 per 1,000 cubic meters, Medvedev said.

"The annual average price could be in the range of $167-171," he said, noting that this forecast is based on the current oil prices.

 Gazprom could increase export of gas to non-CIS countries by 3.5% to 165 mln cubic meters, Medvedev added. 

"It will be about 165 bln cubic meters," he said.

Last year Gazprom increased exports to Europe by 8% to 159.4 bln cubic meters.

Baltic LNG plant

Gazprom still intends to put the Baltic LNG plant into operation in 2021, Deputy Chief Executive Officer of the Russian gas holding Alexander Medvedev said on Thursday.

"The term of commissioning is the most important - 2021. As far as the business model is concerned, it’s still discussed," he said.

The project is based on natural gas from the United Transport System subject to investments into the northwestern regional infrastructure and this makes it competitive, Medvedev said. "I have no doubts in competitiveness of this project," he added.

Speaking about the gas liquefaction technology, this matter is related to sanctions and Gazprom considers other objects in view of absence of domestic technologies, Medvedev said.

The Baltic LNG project contemplates construction of the LNG Plant near Ust-Luga seaport on the Baltic Sea with the capacity of 10 mln tonnes per year.

Gaz export monopoly

Depriving Russian gas giant Gazprom of its exclusive right to export gas via pipeline would do damage to the state, Medvedev told reporters.

"Due to its structure Gazprom carries the burden of all investments in the gas transportation system, these are huge investments, about 50% of our investment program. Our dear colleagues in Novatek and Rosneft did not bear such costs and do not really want to bear them," he said.

Medvedev stressed that "the destruction of the export monopoly on pipeline gas may lead to serious negative consequences, both for Gazprom and the Russian state in terms of export revenues and taxes."

He also noted that the statements of independent producers that their gas will not compete with the gas of Gazprom ignore the laws of market functioning.

Currently, in Russia only Gazprom has the right to export gas via pipeline. Earlier this year Russian largest independent gas producer Novatek and state-owned oil company Rosneft applied to the Energy Ministry for permission to export pipeline gas to Europe. Before that they had already managed to get permission to export LNG.

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