Gazprom sees record EU gas prices

Gazprom's export revenues have been growing as prices spiral

Russian gas producer Gazprom has said it expects record export revenues exceeding $65bn (£36.8bn) as European prices edge towards an all-time high.

It had predicted 2008 sales of $64bn, but has revised the forecast as it sees European gas prices touching $500 per 1,000 cubic metres by the end of 2008.

Gazprom also hopes to conclude an asset swap with BP's Russian joint venture TNK-BP before the year has ended.

State-owned Gazprom is the world's largest gas producer.

It also supplies about a quarter of Europe's gas needs.

Bumper sales

The announcement highlights the upward spiral of gas prices.

If the price forecasts of Gazprom's deputy chief executive Alexander Medvedev are correct, gas prices will be $100 higher than one year ago.

"The shareholders meeting in June that we will [set] a new record and this record will be even higher than I announced," said Mr Medvedev.

But he did concede that the high prices may soon come down.

Gas prices usually bear a correlation to oil prices, however there is a time delay of between six and nine months.

This means that if crude oil prices continue to fall in the coming year, so gas prices could move downwards.

Gazprom is also aiming to boost its European market share from 25% to 33% by 2015 and it is still in discussions with Central Asia from where it receives a considerable amount of its gas imports to fulfil the needs of its home and foreign customers.

Expansion

Gazprom has set its sights on buying control of the Kovykta gas field from TNK-BP before the end of 2008, a move which had been delayed by the internal dispute in BP's Russian joint venture.

A further deal involving an asset swap between Gazprom, TNK-BP and BP is set to follow.

Russia-linked shareholders and BP had been in a months-long dispute over who should control the business. The dispute was resolved last week.

Furthermore, Mr Medvedev did not rule out Gazprom acquiring a stake in TNK-BP itself, saying it could "theoretically" be interested.