Gazprom to Ask for $3.6Bln for Projects

Gazprom will ask the government to fund 100 billion rubles ($3.58 billion) of investments into its electricity units in 2009, the company's deputy chairman said Friday.

"We have put in a request to the government for it to sponsor at least two projects," said Valery Golubev, the firm's deputy chairman.

"First of all, this concerns the fulfillment of the investment programs to construct new electricity-generating capacity at TGK-1, Mosenergo, OGK-2, OGK-6," Golubev said.

Gazprom controls all four of these companies, and three of them — OGK-2, OGK-6 and TGK-1 — each needs more than $1 billion of financing to complete their investment programs to 2010.

"In 2009, the realization of these investment programs … requires of Gazprom around 100 billion rubles. A large portion of that is for TGK-1," he said.

Gazprom had previously announced plans to fund the new power constructions by selling new shares in its electricity units in 2009. The gas major, which has called electricity production part of its core business, has said it would be prepared to spend about $4 billion by 2010 buying up these new shares if no other investors showed interest.

The firm will also cut production this year by 15 billion to 18 billion cubic meters, down about 3 percent from an initial plan of 560 billion cubic meters for the year, Golubev said.

"There is only one reason for this: a drop in demand. This year has been fairly warm. The average temperature in Russia is 6 degrees [Celsius] higher than normal," he said.

The gas producer had planned to increase gas production by 2.3 percent to 561 billion cubic meters of gas, up from 548.5 billion in 2007, when demand also suffered because of the unusually warm winter.

(Reuters, Bloomberg)