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Excellent bluff of Vladimir Putin
Gazprom has released its
consolidated financial statements for 2008 presented in
accordance with the International Financial Reporting Standards.
Major Surprise. The
average price of European exports of Gazprom in Q4-2008 was
$471.9/mcm (mcm = 1000 cubic meters). Gazprom has successfully
convinced the media that the price was above $500/mcm. During the
"gas war" in January,
Prime minister
Vladimir Putin put the price of gas for Ukraine's neighbors in
Q1-2009 at $470/mcm, just 0.4% below the historic record price
of the previous quarter. This was an excellent bluff. Ukraine
did not call it and agreed to pay Gazprom the highest price of gas
in Europe. I expect the average export price of Gazprom in Q1-2009
to be about $380/mcm or $70 lower than the base price of the
Ukrainian contract.
Negative sign.
The average transmission expense per 1000 m3 of marketed gas went up 25% from RUR 644 in 2007 to
RUR 803 in 2008 (from $25.2 to $32.2). It is worth noting that this is not a very accurate
indicator. The expense per 1000 m3 of gas transported per 100 km
will be shown in our reports. I expect the unit transmission cost to
go up radically in the coming years. Gazprom plans to build new
pipelines that will be not required for several years because of the
drop in demand. As the 2030 Program of Gazprom says, an excessive
capacity can significantly reduce the efficiency of the gas sector
of the Russian Federation. Apparently, Gazprom understands the risk
but takes it.
Production cost.
From Q3 to Q4-2008, the average production cost of gas went up 36%
from RUR 438 to RUR 598/mcm (from $17.96 to $21.48/mcm). Note that
in Q4-2008, Rosneft was selling gas from its Kharampur fields in
West Siberia at $19.14/mcm. This is much lower than the production
cost of gas at the deep reservoirs of Gazprom.
The growth of production
cost in Q4 looks more like a result of reallocation of operating
costs between business segments of Gazprom. The average annual
production cost went up 13% from RUR 421 in 2007 to RUR 474/mcm in
2008 (from $16.4 to $19.0/mcm).
Mikhail
Korchemkin
April 30, 2009
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