REUTERS
Gazprom, the world’s biggest natural gas exporter, is planning for the lowest price for its fuel in its main European market for more than a decade, Bloomberg reports.
The state-run exporter is drafting its budget for 2016 with preliminary estimates for gas prices outside the former Soviet Union of about $200 per 1,000 cubic meters, said two people with direct knowledge of the matter who asked not to be identified because the information is private, according to Bloomberg.
That compares with the company’s estimate of an average price for the region, which covers Turkey and Europe outside the Baltic States, in 2015 of about $238 per 1,000 cubic meters and $349 last year.
The company’s press office declined to comment on estimates.
Read alsoGazprom to borrow EUR 1 bln on foreign marketGazprom is facing declining prices abroad as most of its contracts are linked to oil with a time lag of six to nine months. The company is also facing increased competition as the U.S. prepares to export its first liquefied natural gas from the Gulf Coast.
“Gazprom’s forecasts look reasonable,” Alexei Kokin, an energy analyst at UralSib Financial Corp. in Moscow, said by phone Friday. Russia has the capacity to maintain its market share in Europe given lower prices next year even amid the predicted glut in LNG, he said.
Exports to the region are expected to stay stable at about 160 billion cubic meters (5.6 trillion cubic feet) in 2016 with revenue in rubles declining but still near the average of the past few years, according to one of the people.