Volga Gas Sees Fuel Shortfall Driving Prices in Southwest Russia

Volga Gas Plc (VGAS), a natural-gas producer in western and southern Russia, expects to benefit from higher prices and ease of access to pipelines as demand outpaces supply in the regions where it operates.

“There is a deficit of gas in the western and southwestern part of Russia,” Michael Calvey, a board member at the London- based company, said in an interview. “A cubic meter of gas in Saratov or Volgograd is much more valuable than in Siberia.”

Russia’s gas heartland of Siberia is where OAO Gazprom, the world’s biggest producer of the fuel, pumps most of its output. Other gas companies in the region must compete to access pipelines, whereas those operating elsewhere can offload their output to the state-controlled producer for export.

“When you are in a region where there is a deficit, Gazprom is happy to buy your gas,” Calvey said. “It frees them up to export more gas to Europe at a much higher price.”

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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