natural gas industry, and the Netherlands has indicated that the bulk of Europe's future energy supplies will be Russian in origin. This will lead to more joint partnerships between Russia and Western -- especially European -- energy companies.
Gazprom's New Lease on Life
Gazprom's tapping of Zapolyarnoye should help solve many of the company's problems. Gazprom is Russia's top taxpayer, supplying about one-quarter of all federal receipts. But Russian oil companies are beginning to delve into the natural gas market, depriving Gazprom of income at a time when it is still under strict orders to supply
Gazprom's New Lease on Life
Gazprom's tapping of Zapolyarnoye should help solve many of the company's problems. Gazprom is Russia's top taxpayer, supplying about one-quarter of all federal receipts. But Russian oil companies are beginning to delve into the natural gas market, depriving Gazprom of income at a time when it is still under strict orders to supply
Russia with a gas at rates one-fifth to one-fourteenth of world market rates, according to CEO Alexei Miller. That, combined with endemic corruption and asset-stripping, has prevented Gazprom from tapping many new fields during the past decade.
Consequently, Gazprom production figures indicate an average per annum decrease of about 2 percent since 1996. The company produced about 520 billion cubic meters (bcm) in 2000.
The Zapolyarnoye field -- one of the 10 largest in the world -- will change all that. Since Zapolyarnoye is close to Russia's Urengoy field,
Consequently, Gazprom production figures indicate an average per annum decrease of about 2 percent since 1996. The company produced about 520 billion cubic meters (bcm) in 2000.
The Zapolyarnoye field -- one of the 10 largest in the world -- will change all that. Since Zapolyarnoye is close to Russia's Urengoy field,
another massive field already in operation, the cost of bringing Zapolyarnoye on-line is a fraction of many other Russian petroleum projects. Gazprom plans to tap Zapolyarnoye for 20 billion to 30 billion cubic meters this year and ramp production up to a staggering 100 bcm as soon as possible. That's more gas than Germany, Europe's largest gas market, consumes in a year.
Based on the current European gas rates -- about $100 per 1,000 cubic meters -- Zapolyarnoye alone could bring in revenues of $10 billion annually if Moscow exported all its gas.
Based on the current European gas rates -- about $100 per 1,000 cubic meters -- Zapolyarnoye alone could bring in revenues of $10 billion annually if Moscow exported all its gas.