“Gazprom”: In 2009 gas price for Belarus to be equal to $240 per thousand cubic metre

Gazprom’s export earnings in 2009 were to lower by 31.7% in connection with the decrease of an average year export price to $280 per thousand cubic metres. In order to compensate losses companies state that next year gas price for Belarus is to make $240 per thousand cubic metres.

Decrease of Gazprom’s return by 31.7%, or $20 billion is not a final forecast, as oil quotations balance at a margin of $40 per barrel, “Kommersant” newspaper informs.

Now it is discussed in “Gazprom” how falling revenues in the period of the economy stagnation and global financial crisis could be compensated. Partially it could be done thanks to expanding presence of affiliated structures of Gazprom at spot markets of Europe. Thus, on Friday deputy chairman of the board of directors of the monopoly Alexander Medvedev told about the plans to increase volume of sales of Gazprom Marketing&Trading in France from 500 mln cubic metres to 2 billion cubic metres a year. “In the mid-term increase of gas deliveries is to concern all European countries where Russian gas is received, including Italy, Austria and Bulgaria,” Medvedev promised. However, this item of income won’t change Gazprom balance in 2009, analysts say.

Another item of income is increase of gas price for Belarus. In 2009 the gas price is to be equal to $240 per thousand cubic metres. “Kommersant” was told about that by Gazprom manager with a reference to a price formula in the contract with “Beltransgaz”. Double increase of price from $118-128.9 in 2008 would allow the Russian monopoly to earn $5.2 billion instead of $2.8 billion this year according to “Kommersant”, when 22 billion cubic metres would be sold. Talks at the highest level can note a lower price as it happened all the previous years. Last week the price of $160 per thousand cubic metres was called acceptable in Belarus. Though Moldova was importing gas from Russia at a price of $280 per cubic metres in December.

However, these two sources won’t allow Gazprom to compensate $20 billions of decreased income at the EU markets. In these conditions gas price growth should expected in Russia. Gazprom counts on price increase at the internal market in 2009 by 300 rubles per thousand cubic metres. According to Valery Noskov from Trojka Dialogue, when 300 billion cubic metres of gas would be sold, additional income of the monopoly would be $3 billion (with a rate of 30 rubles per $1). That is why in the conditions of the world crisis and decreased volume of gas consumption in Russia Gazprom would possibly have to change its investment plans. “The monopoly starts to feel pressure of low prices. It addressed the government with a request to cancel taxes for realization of Eastern program and developing of Shtokman,” analyst Maxim Shein from Brokercreditservis says.

“In order to implement the Eastern program successfully state support is needed, in order for a privileged regime of tax on natural resources production would be extended for developing gas fields in the east of the country, like for oil fields,” the deputy chairman of Gazprom board of directors Alexander Ananenkov said in an interview to VIP-Premier magazine. Earlier Shtokman Development AG head Yuri Komarov expressed the idea that development of Shtokman field in the Barents Sea should be released from the tax on natural resources production and VAT on equipment import. It is not clear yet whether the government would agree to offer Gazprom tax vacations as the monopoly gives 20% of the federal budget’s revenue side.