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Daily Telegraph: Gazprom turns up profit flame but exports dip

Daily Telegraph image Gazprom

By Russell Hotten
Last Updated: 1:20am BST 09/10/2007
  
Toasting success: but Gazprom forecasts sales to Europe will fall
 
The world’s biggest supplier of natural gas, Gazprom, has posted a bigger-than-expected rise in first-quarter profits on the back of higher energy prices and a one-off accounting gain.

However, analysts said that the Russian energy giant was unlikely to be able to continue the performance for the rest of the year, as Gazprom forecast yesterday that its exports to Europe would fall due to unseasonably warm weather.

The company saw net income rise to 210bn rubles (£4.1bn), up from 185bn roubles in the three months from January to March.

Sales climbed 4.4pc to R612bn as price rises in Europe and Russia helped offset falling demand in one of the warmest winters on record. About 25pc of EU gas supplies currently comes from Gazprom, a proportion that has alarmed some European politicians.

State-run Gazprom is raising prices for former Soviet republics and last week threatened to curb deliveries to Ukraine over an unpaid debt.

About 80pc of Europe’s gas deliveries from Russia travel through Ukraine, and the warning stoked fears of a repeat of January 2006, when Russian supplies to Europe were disrupted in a dispute over pricing.

This uncertainty has focused attention on the UK’s future gas supplies and comes as a group of energy companies were today expected to unveil the completion of a £1bn project to bring more North Sea gas to the UK.

The consortium, which includes Shell, ExxonMobil and Centrica, will for the first time connect the Norwegian gas pipeline to existing UK pipelines to transport unprocessed gas to the UK.

Centrica, which owns British Gas, put up £100m to join the consortium, ensuring that much of the gas comes to the UK rather than going straight to mainland Europe.

The project is in the Statfjord field, one of the North Sea’s oldest. It was primarily an oil producer but will now pump mainly gas to about 2019. At its peak, the new project could meet about 6pc-7pc of the UK’s total daily gas demand.

Gas from Norwegian fields will become increasingly important as the UK seeks to achieve security of supply of the next decade.

It is estimated that Norwegian gas could account for up to 40pc of the UK’s gas requirement by 2015.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/09/cngaz109.xml

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