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2 Apr, 2008 04:52

Gazprom aims to boost gas production

Gazprom has spent the last few years focusing on acquiring new assets – including majority stakes in the Sakhalin 2 project and the Kovykta field in Siberia. But the company is now planning to take a break from its buying spree in order to work

The dominant position of the Russian energy giant is set in stone. Gazprom is the world's largest natural gas producer and has a monopoly on exports from Russia.

It has been busy increasing its portfolio, but industry experts say the time is now right for the company to change direction.

Gazprom is taking a break from acquisitions. Instead, it plans to invest boost inward investment by nearly 40 per cent over the next two years. That’s in order to meet increasing demand for energy at home and abroad. Gazprom’s new strategy means raising production, or maintaining production while they absorb declines in their main fields. It also plans to build up more pipelines in order to ship more products directly to Europe.

Although some European clients have been calling for shorter contracts to reduce their dependence on Gazprom, the company itself says the long-term contracts, usually for 25 years, have to stay.

Gazprom’s Deputy Board Chairman Aleksandr Medvedev says contract security is essential.

“We cannot invest billions of dollars without clarity from our clients. Some in Europe urge us to boost production, while speaking at home of reducing their dependence on Russia,” Medvedev said.

Gazprom already has around 25 percent of the European gas market. And this week it announced plans to have the same share in the global Liquefied Natural Gas (or LNG) market by 2030.

Industry analysts say Gazprom must stay focused on its core business and pump more pipeline gas to increase profitability in the shorter-term.