European Gas Markets, July 17, 2007

Gazprom has enough technical capacity to raise its production forecast to 570 billion cubic metres per year (Gm3/yr) for 2010 (up from the 550-560 Gm3/yr forecast in Gazprom's Energy Strategy 2020) and to 670 Gm3/yr for 2020 (up from the 580-590 Gm3), according to the company's deputy c/e/o/ Aleksandr Ananenkov, speaking at a recent presentation.

Last year Gazprom transported 718 Gm3, comprising its own production, Central Asian gas and gas transported for independent producers, Ananenkov said. This year, Gazprom's capacity would be even higher with resources sufficient to produce 900 Gm3 gas, though Ananenkov said this would only happen if the Russian economy was super-positive and if there was demand (including from new markets outside Russia) and an adequate price.

Seasoned observers of Gazprom are not so sure. Mikhail Korchemkin of East European Gas Analysis Eegas told Heren Energy: "I think Ananenkov meant combined production of all deposits that Gazprom controls or plans to control. It is quite possible that Gazprom plans to take over the production of Novatek, Lukoil and other companies. In any case this plan does not competition in gas production in Russia."

Korchemkin added: "It's hard to figure out how much you could get into Gazprom's existing pipeline system. The plans are too big. Gazprom doesn't have enough money or construction teams to fulfill all its plans".

Professor Jonathan Stern of the Oxford Institute of Energy Studies was of a similar opinion: "The 2020 figures are neither here nor there, what matters are the 2010 ones. Given the he [Ananenkov] also said that Gazprom's production from existing fields declined by more than 25 Gm3 last year, I would have thought that any near-term increase (even allowing for their restated production data which are around 5-7 Gm3 higher than their previous methodology) would be a tall order."

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