Gazprom Invests In Exploration

Russian gas giant Gazprom is going to increase investment in its exploration projects in Russia in 2008-2010 by a factor of 2.5, to RUB 70 billion (approx. $2.98bn) a year, the company’s CEO Alexei Miller told Gazprom’s annual general shareholders meeting on Friday.
In the period up to 2020, Gazprom plans to invest about RUB 90 billion (approx. $3.83bn) in exploration annually. Thanks to its exploration projects, the gas group was able to increase its reserves by 592.1 billion cubic meters in 2007, which is 7 percent more than the company produced. For three consecutive years, Gazprom’s reserve growth exceeded production, unlike other global companies, where reserve replacement ratio is below 90 percent, according to Miller.
He said Gazprom would move to a new level of reserve replacement in the future, building up reserves both in its old and new fields, including in offshore areas.
Miller also said that Gazprom had raised its 2008 gas output target from 561 billion cubic meters to 563 billion cubic meters, up 14.4 billion cubic meters on last year’s output. From January to May 2008, the company produced 246 billion cubic meters of gas, 6.3 billion cubic meters more than in the same period of last year.
In 2007, Gazprom’s output stood at 548.6 billion cubic meters of gas, down 1.3 percent from the 2006 level. The company blamed the decline on lower gas consumption at home and decreased exports as a result of an unusually warm winter of 2006-2007.
Gazprom’s authorized capital of RUB 118,367,564,500 (approx. $5bn) is divided into 23,673,512,900 common shares with a nominal value of RUB 5 (approx. $0.2). The government controls more than 50 percent of the company’s stock. Gazprom’s net profit increased 4.9 percent in 2007 to RUB 360.45 billion (approx. $15.27bn), according to Russian accounting standards. In 2007, the company produced 548.6 billion cubic meters of gas, down from 556 billion cubic meters a year earlier.
Gazprom’s exports to Central and Western Europe in 2007 dropped 0.4 percent to 150.5 billion cubic meters, while revenues from such exports rose 5 percent to $39.5 billion, and the average annual price of Gazprom’s exports to Europe increased to $72.8 per cubic meter of gas. Deliveries to the CIS and the Baltic countries totaled 54.6 billion cubic meters, with export revenues of $5.3 billion. In 2008, the company plans to export over 163 billion cubic meters to countries outside the CIS and the Baltic region, earning $64 billion, while exporting 50 billion cubic meters to the CIS and the Baltic countries, for a total worth of $7.6 billion.