LUKOIL head Vagit Alekperov leaving a meeting with Gazprom head Alexey Miller and independent natural gas producers
Photo: Vasily Shaposhnikov
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Gas Market Adopts Limits
Gazprom and independent natural gas producers decided yesterday to limit gas production limits proportionately due to the unseasonably warm weather. Gazprom will reduce its production from 561 billion cu. m. to 557 cu. m. for the year. LUKOIL president Vagit Alekperov said that independent producers will reduce production by no more than 8 percent of their annual output before the third quarter of the year. Executives from TNK-BP, Intera and NOVATEK were also present at the decisive meeting.
Deputy director of the Gazprom information policy department Sergey Kupriyanov said that the reductions were related to the weather and reduced usage of gas from overfilled underground reservoirs. Unofficially, Gazprom sources say that they are developing the mechanisms of a “gas OPEC.”
Independent companies were at odds to explain the causes and goals of the reductions yesterday. Head of NOVATEK Leonid Mikhelson commented that “The complexity of the mechanism of the functioning of the gas transport system dictates the necessity of coordinating the activities of gas-producing companies by agreeing on the volume of production.”
Analysts doubted the official explanation about weather conditions. Accord Invest analyst Konstantin Selyanin suggested the real reason was reduced capacity in the Gazprom gas transport system, because of the recent serious accident in Ukraine and for other reasons. Gazprom is thus attempting to shift its losses onto “formerly independent” producers, which are controlled by Gazprom to a significant degree.
In any case, the volume of gas sales in Russia will not be reduced. “Growth of consumption because of economic growth and new electricity generating plants may exceed the reduction of gas usage for heating,” noted Mikhail Korchemkin of East European Gas Analysis. He added that reduced production and reduced export to Europe will have a negative effect on Gazprom's economic indicators. Since rthe beginning of the year, the company's exports to Europe have dropped by more than 9 billion cu. m., that is, $2.7 billion.
www.kommersant.com
All the Article in Russian as of May 31, 2007
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