Gazprom to increase gas prices
16
8:42, — Economics
Average price for Russian gas can seriously grow for Europe and the CIS countries.
Gazprom CEO Aleksei Miller said gas prices for Europe could reach USD 400 per 1,000 cubic metres. As a result the Russian gas monopolist can get additional revenue of USD 3 billion. The CIS countries will also face increase in the cost of blue fuel. The company is going to start up negotiations with them in the connection with raise in price of Asia gas from 2009. The decision of the Asian Gazprom’s partners makes the company to initiate a serious dialog with CIS consumers, Miller emphasised.
Gazprom chief executive Aleksei Miller met with Vladimir Putin on 14 March and confirmed the decision of Kazakhstan, Turkmenistan and Uzbekistan to set up European gas prices was final. As a result cost of the gas, Gazprom buys to sell at foreign markets will raise essentially. In this connection the company is going to start up immediately negotiations with the CIS countries, consumers of Asian gas. According to the Gazprom CEO, the issue of price was raised in good time by Central Asia countries. “A consumer should take into account the real price developments at the European market when creating budget for next year,” the Gazprom head noted.
According to Miller, increase in prices of Asian gas won’t affect European Gazprom’s partners. But the EU should expect the Russian gas to rise in price. The forecasted for 2008 gas price for European consumers was USD 320 per 1,000 cubic metres. “The gas prices in Europe exceed 370 dollars. We suppose, the average gas price in 2008 can reach USD 378, or even 400 dollars per 1,000 cubic metres,” the head of the Russian monopolist said.
It is implicitly connected with low dollar rate, but, as Mr Miller noted, “gas prices behaviour outruns dollar rate changing, and doesn’t hinder the rising demand for gas at the European market.” Gazprom sold to EU countries 151 billion cubic metres in 2007, and plans to sell 157 billion cubic metres this year.
The main reason of rising gas prices for Europe is increase in price for oil products. Gas price is linked to them according to Gazprom contracts, Konstantin Cherepanov, KIT Finance analyst said in the interview to information agency RBK. Europe knows about this reliance and is ready for increase in gas prices. According to the expert, rising of gas price for former Soviet republics is unavoidable process. In particular, it is planned that the gas prices for Belarus will be growing and will have reached the European level minus export tax and Gazprom transport expanses by 2011. In the frames of this agreement, Gazprom also increases its stake in Beltransgaz.
“Increase in prices is unavoidable. Neither Gazprom nor Ukraine can buy Central Asia gas at such big discounts,” Mikhail Korchemkin, chair of East European Gas Analysis, is sure. But gas prices for Ukraine should depend not only on average European export price of Gazprom, but also on contract terms. Ukraine is the only big importer which buys more gas in summer than in winter. If it bought gas in accordance to its season demands, Gazprom would have to reduce its export to Europe in winter. So, if Gazprom buys Asian gas at European price, it will have to sell it to Europe, and supply Ukraine with gas at discount. According to estimation of Natallya Milchakova from financial corporation “Otkritie”, average gas price for CIS consumers (Belarus, Moldova, Armenia, Georgia) for 2008 amounts to USD 162 per 1,000 cubic metres.
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