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12

Gazprom May Slash Capital Spending in 2009

Gazprom may slash planned 2009 capital expenditure by about $5.55 billion, the Kommersant business daily reported on Wednesday, citing an unidentified source

Gazprom's board of directors met on Tuesday to discuss ways to cut costs, according to the source, which the paper said had direct knowledge of the matter.

One of the key ideas being discussed inside Gazprom was to keep investing only in projects which would be profitable under an oil price of $25 per barrel of Brent, worked out with an exchange rate of 36 roubles per U.S. dollar.

Gazprom may cut capex to 460-492 billion roubles in 2009 from an earlier planned 699.9 billion roubles, according to the source. The total investment programme could be cut to about 713 billion roubles from 920.5 billion roubles.

The earlier planned investments were based on a forecast for oil of $50 per barrel, the paper said.

Gazprom is discussing different ways to cut costs as the price for natural gas declines and Russia seeks to focus spending during the crisis.

A spokesman for Gazprom could not immediately be reached for comment.

Author: Ksenia Kochneva