Gazprom Plans to Borrow from State

"We are fully maintaining our plans for 2009 as far as key projects are concerned. ...We may attract some funds from the state," CEO Alexei Miller told reporters in the Arctic city of Ukhta.

The company may turn to the state for funding because the terms are "more attractive" than those for commercial loans, Miller said. The investment program must be approved by the company's board by the end of December, he said.

A quarter of Gazprom's investments will be related to developing the isolated Arctic peninsula of Yamal, and that share will grow to a third of all spending in the next two years, Miller said.

Yamal is the company's key source of future output as production falls at mature deposits in western Siberia. Yamal and eastern Siberia will account for half of its output by 2020.

By 2030, it will produce 360 billion cubic meters annually, twice what Gazprom currently exports.

The company, which supplies Europe with a quarter of its gas needs, regularly revises both its capital expenditure and financial investment needs, sometimes three times a year. It says projects are getting more expensive because of rising prices for construction materials and services.

Author: Ksenia Kochneva