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Gazprom left without investment program
The document will have to be amended
The Board of Directors of the Russian gas giant Gazprom discussed the company’s investment program and budget for 2007-2009 yesterday, but the documents have not been approved. According to RBC Daily, government representatives were not happy with proposed gas prices and planned investment in gas production and processing. The program will have to be amended in accordance with the results of the government’s meeting on Friday to discuss increases in gas and electricity prices.
“The Board of Directors has approved the principles used for planning the budget and investment programs, and decided that these documents need to be amended and discussed again before the end of this year,” Gazprom’s press release said. The company refused to comment on the issue.
All members of Gazprom’s Board of Directors took part in yesterday’s meeting, except for Economy Minister German Gref. The Ministry for Industry and Energy has not commented on its position. According to RBC Daily, government officials were not happy with the planned level of investment in gas production and processing, and with some other terms of the program. The project envisages a 42.5 percent increase in investment, from RUR 373.14 billion to RUR 531.78 billion in 2007 (approx. $14.2 billion to $20.2 billion). In 2008 and 2009, investment is projected to be RUR 623.73 billion and RUR 702.95 billion respectively ($23.7 billion to $26.7 billion). German Gref criticized Gazprom’s investment program last week.
Gref said he had not been satisfied with Gazprom’s investment programs over the past few years. The program should be focused on boosting production and developing the gas transportation network, the Economy Minister stressed. He pointed to the need to increase gas production by independent producers before 2015. In this respect, one of the top priorities is to develop the gas transportation infrastructure and ensure equal access to it. “And Gazprom rebuffs independent gas producers,” says Mikhail Korchemkin, Director of the East European Gas Analysis consultancy. He described Gazprom’s investment program as “smeared” while it had to be focused on a profitable gas business.
But the most disputable issue was that of gas prices. Gazprom and RAO Unified Energy Systems of Russia have long insisted on raising domestic prices for natural gas. The Ministry for Industry and Energy suggested raising gas prices for industrial producers and power plants to $80 per 1,000 cubic meters in 2007. But Prime Minister Mikhail Fradkov said last week that this would fuel inflation. Instead he suggested increasing the price to $90 from 1 January 2009. The issue will be discussed by the government tomorrow. The results of the discussion will be taken into account by experts working on Gazprom’s investment program. Analytical department of RIA RosBusinessConsulting
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