As competition for energy resources increases
OAO Gazprom, the world`s biggest natural-gas company, expects oil prices to reach $250 a barrel in the ``foreseeable future`` as competition for energy resources increases, Chief Executive Officer Alexei Miller said, according to Bloomberg.
``We are witnessing a big jump in the price of hydrocarbons,`` Miller told reporters today in a briefing in Deauville, France.
Crude futures have more than doubled in the past year, reaching a record $139.12 a barrel last week. The surge is hurting global economic growth prospects, the World Bank and the International Energy Agency said today.
State-run Gazprom plans to have a $1 trillion market value as early as 2015, Miller said. The company gets most of its profit from gas sales to Europe, where it has a quarter of the market and prices are pegged to oil.
Miller said that European customers are now paying an average of $410 per 1,000 cubic meters of gas, more than double the rate from two years ago.
Deputy CEO Alexander Medvedev, who also spoke at the briefing, defended the existing formula for European customers that links the gas price to oil.
``Unpegging the gas price from the oil price would be a big mistake for continental Europe,`` Medvedev said, as a spot market would make Europe vulnerable to the appearance of one dominant supplier of the fuel.
The majority of Gazprom`s European customers ``insist`` on the oil price peg, he said, since it provides stability and sustainability to their long-term contracts. Spot markets in the U.K. and U.S. made sense because those countries covered their own domestic gas demand when trading began, Medvedev said.