BELARUS NEWS AND ANALYSIS

DATE:

28/12/2006

Russian gas giant Gazprom to export gas at average price of USD 260 per 1,000 cubic meters in '07

MOSCOW. Dec 28 (Interfax) - Gazprom Deputy Chairman and Gazprom Export Chairman Alexander Medvedev said the average price at which Gazprom plans to export its gas in 2007 is USD 260 per 1,000 cubic meters.

"The price forecast is very simple," he said during a conference call for investors Wednesday. "Considering that our contracts stipulate prices for 6 and 9 months, the price forecast concerning gas supplies to foreign countries in 2007 is about USD 260 per 1,000 cubic meters."

Gazprom's relations with its clients provide for different payment options that vary depending on the client's solvency, Medvedev said. For instance, in the case of Georgia, Gazprom had to demand advance payment. Letters of credit are also used in dealings with a number of clients from East Europe and former USSR, he said.

Asked whether Gazprom plans to include spot gas prices in the price formula, Medvedev said, "There are no grounds to change them, and they will still be based on the oil product assortment.

"Moreover, an increasingly larger number of clients on new contracts are insisting that the prices be tied to oil products," he added. "It is understandable, because the midterm correlation between the spot prices and the prices based on the oil product portfolio is higher than 97%. At the same time, the spot prices are much more volatile. Therefore, it is absolutely justifiable that the clients want to have predictable and stable prices.

"However, despite this, when we consider gas supplies to such facilities as electric power generating plants, we agree to include certain components related either to the electricity prices or the competing fuels, like coal, in the formulas in new contracts," Medvedev said. "But this does not change our principle that the pricing system must be based on the oil product portfolio."

Gazprom is also buying gas on spot markets, according to the Medvedev.

"The NBP [National Balancing Point, a gas trading floor in the UK] prices are currently lower than those in our long-term contracts, and therefore we are actively buying gas on the spot market for our needs," he said.

Commenting on gas supplies from Turkmenistan in light of the latest events in that country, Medvedev said: "All current supplies are being fulfilled. There is a contractual pressure, and, in our view, the commitments that we have signed with Turkmenistan will be honored."

Source:

http://wiadomosci.onet.pl/1456159,10,1,0,120,686,item.html