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. Last Updated: 07/27/2016

Gazprom Production Warning

The head of natural gas monopoly Gazprom said in an interview published Wednesday that gas production was falling despite rising tariffs and export markets could be at risk.

Rem Vyakhirev told the business daily Kommersant that extraction costs had outstripped tariff growth. He also voiced reservations about a restructure that could lead to the company being split into separate units handling extraction, transport and sales.

"The population can't pay acceptable prices for gas or electricity, but we can't help raising them because the gas industry's losses are bigger than growth [in tariffs]. So extraction is falling," he said.

"And if we lose our energy resources, we lose our export markets," he said. "The main task is to stop that from happening."

Gazprom has said its output dropped to 523.1 billion cubic meters in 2000 from 545.6 bcm in 1999, but exports rose to 129.1 bcm from 126.8 bcm in 1999. The company has contracts to deliver 175 bcm to 205 bcm per year to Europe beyond 2007.

Vyakhirev said that restructuring should be put off until Gazprom called in the bulk of its debts, which he expected in five years' time. Gas payments came in 15 percent over target last year, meaning some clients cleared previous years' debts. But clients still owe billions of dollars, including a roughly $2 billion debt owed by neighboring Ukraine.

"Only in five years will Gazprom begin to exist like a normal company, like gas companies in the rest of the world," Vyakhirev said.