Russ Oil-Gas

05-22-2009 - Upstream OnLine - Russian gas giant Gazprom faces a drop in natural gas output of up to 18% this year, a senior company executive said. Aleksandr Ananenkov, the deputy head of the gas export monopoly, told Interfax news agency: "The volume of gas production, considering real consumption on the market, could be 450 billion to 510 billion cubic metres of gas." In 2008 Gazprom produced 550 Bcm, so a decline to 450 Bcm would mean a decline of 18.2%. Gas production at the state-controlled company fell 28% last month to the lowest level in a decade in response to plummeting demand in Europe. Analysts expected a recovery only in the second half of 2009 when gas prices were expected to fall in line with the lower oil price, which they follow after a lag of six to nine months. Cash-strapped consumers delayed purchases until gas was cheaper, and switched to alternative fuels. Around 80% of Russian gas output comes from Gazprom, which supplies a quarter of Europe's gas and is the world's largest producer of the fuel.