Russia's Gazprom: Gas Prices to Keep Rising

Russia's Gazprom, which supplies a quarter of Europe's natural gas, expects gas prices to keep rising, dragged higher by oil, Chief Executive Alexei Miller said on Wednesday.

The price for 1,000 cubic meters of gas is already $410, a third more than Gazprom's prediction last year of $310, he told reporters, offering scant hope for relief from rising energy costs.

"The tendency for a rising gas price is set to hold on," he said at an event to mark the 35th anniversary of Russian gas deliveries to Germany.

He was not more specific.

"For users, this situation is dramatic," he said.

Europe's gas prices are mainly based on long-term contracts which are tied to the price of crude oil with a time lag of about half a year.

Crude oil prices have broken historical records since last year and peaked at $139 a barrel on Friday.

Moscow-based Gazprom, which holds the world's largest reserves of natural gas, on Tuesday predicted $250 per barrel for next year.

Of fossil fuels, natural gas produces the least amount of carbon dioxide at a time when the European Union has ambitious targets to cut CO2 emissions.

Europe's dependence on Russian gas is growing, but Miller cautioned there was no need to worry.

"Gazprom depends on Europe as Europe depends on Gazprom," he said. "We are prepared to deliver as much gas to our European consumers as they need."

But while Europe is willing to take Russian gas, it is impeding Gazprom's ambitions to expand on the continent, where it wants to sell gas directly to households rather than through European utilities, Miller said.

"Gazprom considered buying a stake in a European company (but) there was so much noise that we left it," he said, declining to be more specific.

Gazprom was interested in buying a stake in British utility Centrica and was reported to have considered buying stakes in German utility RWE and Evonik.

Gazprom, already the world's largest gas producer with a stock market value of over $330 billion, expects to become a $1 trillion company within seven to 10 years.

Gazprom sells the EU around a quarter of its gas and wants to raise this to around a third.

Brussels has sought to diversify supplies to avoid over reliance on Russia and improve the security of energy supplies.

Miller said on Wednesday he was "very optimistic" Gazprom would sign a contract with German utility E.ON on a Siberian gas field.