Gazprom Seen Gaining Up to $2 Billion as Netherlands Cuts Output

OAO Gazprom may increase natural gas deliveries to the European Union and add as much as $2 billion to operating profit as the Netherlands cuts output at its biggest deposit, according to Sberbank CIB.

The Russian company, one of the suppliers to the EU that isn’t experiencing an output squeeze, is set to fill most of the gap, according to Oleg Maximov, Alex Fak and Valery Nesterov, analysts at the Moscow-based investment bank.

The decrease “comes at a time when Gazprom’s major competitors on the European market (Norway, Algeria and Libya) are facing output crunches of their own, while the price of Qatari LNG is elevated due to a demand surge in Asia,” they wrote in a report today.

The Netherlands, the EU’s largest producer, plans to reduce output in the Groningen province in the next three years after extraction caused earthquakes and damaged houses in the region. Total output from the Groningen field alone is set at 42.5 billion cubic meters for 2014 and 2015 from almost 54 billion cubic meters in 2013, the Dutch government said Jan. 17 on its website.

The cuts may boost Gazprom’s sales by at least 5 billion cubic meters, raising operating profit by $1 billion to $2 billion from a current estimate of $54 billion, the analysts said, adding that the gain depends on demand, weather and the reaction of liquefied natural gas producers, they said.

Sberbank CIB said it had forecast Gazprom’s 2014 exports to Europe, excluding former Soviet republic, at about 164 billion cubic meters of gas, a 1.5 percent increase from 2013, before the Netherlands’ announced cuts.

Gazprom Export’s press office declined to comment on 2014 forecasts.

To contact the reporter on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net

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

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