Gazprom lowers natural gas output forecast for this year

[MOSCOW] OAO Gazprom, Russia's biggest company, lowered its forecast for natural gas output for this year a second time amid competition at home, weak demand in Europe and a milder than expected winter.

The gas exporter plans to produce about 450 billion cubic metres in 2015, Vsevolod Cherepanov, head of gas, condensate, oil production, told reporters in Moscow Tuesday.

Gazprom had previously forecast output of 485 billion cubic metres, which was cut to 471 billion, according to a first- quarter report last week. The new plan is still higher than last year's output of 443.9 billion cubic metres.

Europe, traditionally Gazprom's biggest market for revenue, is seeking to diversify away from reliance on Russia amid a conflict in Ukraine that has soured ties and threatened to disrupt transit in winter. Domestically, the company is facing competition from OAO Novatek and oil producers such as state-run OAO Rosneft, which because of Gazprom's export monopoly can sell natural gas only at home.

Gazprom's maximum daily output capacity will fall to 1.5 billion cubic metres a day from 1.65 billion cubic metres a day last year, deputy chief executive officer Vitaly Markelov said at the same briefing. Meanwhile, output at the company's Bovanenkovo project on the northerly Yamal peninsula will reach 51 billion cubic metres this year, he said.

This year's current gas production forecast was based on first-quarter results, Mr Markelov said.

The hope is for a cold winter in Europe, Mr Markelov said. Actual output always depends on sales and the plan might be changed again, he said.

BLOOMBERG