Gas in Europe will hit $US 500 in 2008, says Gazprom chief

Gas prices to Europe could reach $US 500 per thousand cubic metres by the end of this year, up from the current $US 410, according to Gazprom's chief. Aleksey Miller says it could go even higher if oil prices continue to rise.

“Our forecast is that oil prices will go up to $250 per barrel in the near future. In this case the gas price will increase to over a thousand dollars per thousand cubic metres. However, it is not something supernatural for the market.There have already been cases on the European futures markets when the gas price has been above one thousand. Gazprom's forecast for the end of the year sees the gas price in Europe at over $US 500,” Millier stated.

Gas price talks will stay on the agenda as the Russian president travels through central Asia.

President Medvedev plans to secure Russia’s right to ship natural gas from Turkmenistan to Europe and complete negotiations on a new Caspian pipeline running parallel to the existing Central Asian pipeline.

But the EU wants to build the Nabucco pipeline from the region through Turkey. It would bypass Russia.

Both are competing for the same Caspian gas.

If gas prices rise to European levels, that could throw into question the logic of the European Union's pipeline project.

Starting from 2009, Turkmenistan will charge Russia market levels for its gas.

Currently Russia provides 39% of Europe's pipeline gas supplies, and wants to use the new Caspian pipeline to increase that.