Gazprom pipelines and export capacity

Газопроводы Газпрома и экспортные мощности

Gas pipelines of West Siberia

Газопроводы Западной Сибири

Export flows of Gazprom

Экспортные потоки

Spot, Gazprom, Brent

Цены на нефть и газ

End-use price of gas

Russia and USA

Daily gas production

Суточная добыча


2009 Gas Sales Are Expected at the Level of 2007


In H2-2009, the average price of European exports of Gazprom is likely to drop below $180/mcm

According to our estimations, the 2009 gas sales of Gazprom (excluding LNG sales of the Sakhalin-2 project) are likely to be at $72 billion, or $30 billion below the record of 2008. In the second half of 2009, the average price of European exports of Gazprom is expected at $170-180/mcm (mcm = thousand cubic meters), at the level of H1-2005.

Projection of Gas Sales of Gazprom in 2008-2009

 

2008

2008

2008

2008

2009

2009

2009

2009

 

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

 Volumes, bcm:

 

 

 

 

 

 

 

 

 Russia
105

55

49

92

101

51

46

94

 FSU
25

25

21

22

21

20

17

23

 Europe and Turkey (1)

54

46

35

36

41

38

36

38

Total:

184

126

105

150

163

109

99

154

 Average price per mcm:

 

 

 

 

 

 

 

 

 Russia, RUR

1652

1655

1655

1655

1738

1859

1990

2113

 Russia, USD

69

70

68

59

58

60

62

64

 FSU, USD

151

148

148

148

300

200

150

150

 Europe and Turkey, USD (1)

346

390

412

500

384

250

179

175

 Gross revenue, USD billion

 

 

 

 

 

 

 

 

 Russia, net of VAT

7.2

3.8

3.3

5.5

5.8

3.1

2.9

6.0

 FSU

3.8

3.6

3.2

3.3

6.4

3.9

2.6

3.4

 Europe and Turkey

18.5

18.0

14.3

18.0

15.8

9.6

6.4

6.6

Total:

29.5

25.5

20.8

26.7

28.0

16.6

11.8

16.0

 Average price of Brent crue, $/bbl

97

121

114

55

45

45

45

45

 Average rate RUR/USD

24.04

23.61

24.42

27.84

30.00

31.00

32.00

33.00

Data for Q3-Q4-2008 and 2009 are estimations of East European Gas Analysis.

(1) Note that LNG sales of the Sakhalin-2 project are not shown in the table.

The dollar revenue of Gazprom depends on the speed of devaluation of the ruble. Despite the planned growth of the ruble price of gas for Russian consumers, the dollar price is likely to stay below the record level of Q2-2008. In US dollars, the 2009 gas sales in Russia are expected to drop by 10% because of the weaker ruble and lower demand. Note that in 1998-1999, while the price in rubles was fixed, the dollar revenue from domestic sales of Gazprom has lost three-quarters, same as the value of the ruble against US dollar.

The 2009 revenue from gas sales to Europe and Turkey is expected to drop by 40-45% because of the simultaneous decrease of the price and demand. FSU will be the only market showing the growth of revenue.

Gazprom's Revenue from Gas Sales to Europe & Turkey by Quarter, USD billion

In general, the 2009 gas sales' revenue will be at the level of 2007, a very successful year of Gazprom. The drop will be not catastrophic if the Russian gas monopoly cuts its huge investment program and reduces its pipeline construction and field development costs to realistic levels. Currently, pipeline construction costs of Gazprom per 1 km are 2-3 times higher than the costs of other companies. Without the cost reduction, Russian gas consumers will get additional increase of gas price, which in turn will extend the period of the economic crisis in Russia.

Mikhail Korchemkin

January 4, 2009


Last modified: 12/07/14                    East European Gas Analysis 2006-2014                                           Email: info@eegas.com
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