June 20 (Bloomberg) -- OAO Gazprom expects revenue from natural-gas exports to Europe to jump 37 percent this year after prices for the fuel rose and demand recovered.
Sales may exceed $60 billion, compared with almost $44 billion last year, Deputy Chief Executive Officer Alexander Medvedev told reporters today in Moscow.
Gazprom, which meets a quarter of Europe’s gas demand, may export as much as 159 billion cubic meters this year, Medvedev said last week. Exports are expected to be at least 155 billion cubic meters in 2011, he said. Europe is Gazprom’s biggest market by revenue as domestic prices are still capped.
The producer sold about 139 billion cubic meters to Europe last year, including 34 billion to Germany, its biggest customer outside the former Soviet Union, it said in materials distributed to reporters today.
Gazprom Export, the export arm of the gas producer, will start combining sales to the former Soviet Union when reporting total export revenue, Medvedev said. Combined export revenue totaled $36.3 billion in the first five months of the year.
“This means we will have a record year this year,” Medvedev said. Combined exports hit a record of $81.6 billion in 2008, he said.
The Moscow-based exporter is holding another round of talks with some of its largest European partners on gas supply contracts, Medvedev said, when asked about negotiations with EON AG, Eni SpA and GDF Suez SA.
GDF Suez, Europe’s largest natural-gas network operator, and German utility EON were among European gas buyers that negotiated a higher weighting for spot-gas prices in their multiyear contracts with suppliers including Gazprom last year.
Medvedev declined to reveal the essence of this year’s talks or elaborate on timing. He said the exporter reached “very balanced” conditions with partners including GasTerra BV and Edison SpA recently, preserving the oil-linked prices.
GDF Suez Vice-Chairman Jean-Francois Cirelli said last month that there’s “a lot of pressure” on the European gas market, which can no longer abide by a two-tier pricing for gas.
Gazprom expects its average price to be about $400 per 1,000 cubic meters this year, while forecasting spot prices for the winter of 2011-2012 of more than $400.
While there is still a risk that a gap between the two prices could widen because of increasing oil prices, “many illusions about the spot market are disappearing,” Medvedev said.
Gazprom received $1.2 billion in December and May in payments for gas that was contracted but not taken under a so-called take-or-pay agreement, Medvedev said. An additional $1 billion is expected from Turkey, he said, adding that the total amount equals 7.2 billion cubic meters of gas that would otherwise have been supplied. That compares with $1.2 billion, or 4.1 billion cubic meters, that wasn’t taken in 2009, he said.
To contact the reporter on this story: Anna Shiryaevskaya in Moscow at firstname.lastname@example.org
To contact the editor responsible for this story: Will Kennedy at email@example.com