Gazprom May Thwart Putin Drive for Russian Energy Dominance

In Gazprom’s tinted-glass tower in southern Moscow, the company’s managers are wrestling with a raft of issues. Wood Mackenzie Consultants Ltd., an Edinburgh-based firm, says Gazprom’s annual production will grow no more than 1 percent a year until the end of the decade. Gazprom’s three major fields — Medvezhye, Urengoi and Yamburg — are all in decline, and its newest big development, the Zapolyarnoye field, peaked in 2005, producing 100 billion cubic meters of gas that year.
“It’s not an immediate crisis, but within three to four years, it could be,” says Jonathan Stern, director of gas research at Britain’s Oxford Institute for Energy Studies. “Gazprom has a number of options, but it’s not an easy choice. The future is much more uncertain than the past.”

The International Energy Agency, the advisory body for wealthy energy-consuming nations, admonished Gazprom last year for not investing enough in new fields. “Gazprom’s annual investments have been on the order of $7 billion since 2003,” the IEA wrote in a report in the summer of 2006. “But much has been directed at foreign acquisitions and new export infrastructure.” The IEA estimated that Russia could face shortfalls of 50 billion cubic meters of gas by 2010 if its three big fields decline by 20 billion cubic meters annually and deliveries from Central Asia don’t rise.

Bloomberg