Oil and Gas News

Gazprom to adopt market prices for former Soviet states by 2008

Dec 8, 2006, 16:04 GMT

Moscow - Russian natural gas monopoly Gazprom will charge market prices for all former Soviet republics by 2008, company board chairman Dmitry Medvedev said Friday.

'Deliveries will be realized as they are for more distant foreign (customers),' Medevedev said in remarks run by Interfax.

Medvedev, who is also Russia's first deputy prime minister, said the changes would be effected gradually and that Moscow would take the economic conditions of each country into account in raising prices.

Gazprom, a state-run company that is the world's largest natural gas producer, has been accused in Europe of using its supplies to advance Russian foreign policy.

While West European countries are to pay a uniform 293 US dollars per 1,000 cubic metres of the fuel next year, prices for former Soviet countries - which are closer to Russia and therefore have paid less than their European counterparts - have been assessed on a case- by-case basis.

Ukraine, which has made progress in mending ties with Russia in the past year, is to pay 130 dollars in 2007. Georgia, on the other hand, with its anti-Russian leadership, will pay 230 dollars.

The move to introduce market prices for the former Soviet republics will take the sting out of such criticism, as well as provide Gazprom with a platform for raising domestic gas prices, which it has said it intends to do.

Natural gas sells in Russia for approximately 40 dollars per 1,000 cubic metres.

The supplier of one-quarter of Europe's natural gas, Gazprom may in the near future become the world's biggest company by capitalization, Medvedev said. The firm is now the third-largest energy corporation globally, with a capitalization of nearly 280 billion dollars.

Medvedev also touched on plans for future Gazprom projects Friday, hinting that the company may enter TNK-BP's Kovytka gas project. With 1.9 trillion cubic metres of reserves, the field is one of the world's largest.