Depressed natural gas consumption in Europe will rise next year and the surplus of gas will disappear in 2011, boosting prices, Gazprom deputy chief executive Alexander Medvedev said Tuesday.
The world's largest natural gas producer plans to ship 160.8 billion cubic meters of gas worth $50.3 billion in revenue to Europe next year, Medvedev said at a televised gas conference. That volume is 13 percent higher than what Gazprom expects to sell this year.
Russia exported a total of 174 billion cubic meters of gas in 2008, according to the Federal Statistics Service. Gazprom, the country's gas exporting monopoly, has been hit hard by the economic downturn as global demand for energy slumped.
Medvedev said Gazprom expects demand in Europe to drop by some 5 percent to 7 percent this year in "a record-steep decline for the whole history of the gas industry."
In January to August, consumption in Europe dropped 7.5 percent to 30.4 billion cubic meters, Medvedev said, quoting data from the International Energy Agency and Eurostat.
He insisted, however, that the figures are still better than in 2007 and that demand will pick up significantly in 2011.
"We can expect a temporary surplus of gas to disappear as early as in 2011," Medvedev said. "In this case, prices under spot contracts and oil-based contracts will become equal."
Medvedev also reacted to recent reports that Gazprom is losing its market share as its long-term contracts provide little flexibility for clients.
"We have a good Russian saying: Don't lay your own fault at somebody else's door," he said. "Russian gas has always been competitive and will remain such."
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