Gazprom May Surpass 2013 Gas Export Plan on Increased Demand

OAO Gazprom, the world’s biggest natural-gas producer, may export more fuel than planned this year as demand in Europe for Russian supplies increased amid lower shipments from other sources.

Export revenue, which will depend on oil prices and retroactive payments to European clients, will beat last year’s $55.9 billion, Deputy Chief Executive Officer Alexander Medvedev said in a corporate magazine e-mailed today.

Europe, which depends on Russia for about of quarter of its gas needs, has increased imports from the country as North Sea output declined, more liquefied natural gas was diverted to higher-priced markets in Asia and supply fell amid disruptions in Norway and North Africa.

“As exports from Russia increased, supplies to Europe from other countries declined,” Medvedev said. “Clients can optimize their portfolios during the course of the year, taking more gas from one source or another. At the moment, Russian gas is more attractive.”

The company forecast shipments outside the former Soviet Union of 160 billion cubic meters this year, Chief Executive Officer Alexey Miller said in June. Gazprom exported 131 billion cubic meters in the first 10 months of the year, compared with 113 billion cubic meters a year earlier, the company’s export unit said on Nov. 1.

Caspian Gas

Europe will need an additional 145 billion cubic meters of imported gas in 2025 and 185 billion cubic meters in 2035, Medvedev said. Gas from the Caspian region will replace declining volumes from Algeria and Libya, while European shale gas may only be profitable in regions where it’s produced, especially those which aren’t linked to gas grids, he said.

“While Norway is capable of restoring production, the U.K. and Algeria are unlikely to be able to do so quickly,” he said. “It looks like political and social instability in the Middle East and North Africa is unlikely to end soon, maybe it’s just gaining momentum.”

LNG exports from the U.S. are likely to be priced at $12 to $13 per million British thermal units, or about $400 to $450 per 1,000 cubic meters, including transport costs and fees, compared with “significantly less than $400” for Gazprom’s gas in Europe today, he said.

Before it's here, it's on the Bloomberg Terminal.