Russia to reduce gas prices for Europe

11:35, 12 November 2008

Gazprom chief executive Alexei Miller said

Russian state-run energy giant Gazprom will reduce the price it charges European nations for gas from next year, company head Alexei Miller said on Wednesday, quoted by RIA-Novosti news agency.

"It`s absolutely clear that prices for gas from the start of 2009 for European consumers will go down," Gazprom chief executive Alexei Miller said.

Miller, speaking on a visit to the energy-rich Yamalo-Nenets region that supplies much of Russian gas production, said current gas prices, exceeding 500 dollars (396 euros) per 1,000 cubic metres, were at a record high.

Analysts say a fall in Russian gas prices has been on the cards as Russian gas price movements shadow the price of oil, albeit with a time lag.

"We will produce as much gas as consumers need. Gazprom`s extraction capacity is significantly higher than the amount it extracts," Miller said.

Speaking alongside Miller, the chief executive of German chemical company BASF, Jurgen Hambrecht, also predicted a reduction in gas prices for Europe, but starting in the second quarter of 2009.

The European Union relies on Russia for about a quarter of its gas supplies.

Amid a widespread economic downturn, analysts have predicted a slowdown in Russian plans to build a strategic gas pipeline to southern Europe, as well as plans for a rival EU-backed pipeline from the Caspian Sea known as Nabucco.


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