Gazprom Set to Cut Output in Downturn

LONDON — The global economic downturn is squeezing Russian natural-gas giant OAO Gazprom as falling demand for energy forces it to cut gas sales to Europe and deprives the company of valuable export revenue.

In an interview, Alexander Medvedev, Gazprom’s deputy chief executive, said the price its European customers pay for gas will fall 32% to $280 per thousand cubic meters this year from $409 per thousand cubic meters last year. Exports to Europe will decline 5% to 170 billion cubic meters.


Analysts said Gazprom would clearly have to trim production to reflect falling demand, though Mr. Medvedev declined to say by how much. “We will not produce and sell more gas than the market demands,” he said. “Our target is not to chase volumes.”

But he said that despite sliding prices, Gazprom is committed to investing billions of dollars in new export pipelines to Europe and new gas fields in Siberia — although overall dollar-denominated investments are likely to fall from last year because of the weakening ruble, which has shed a third of its value since the autumn.

WSJ