Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gazprom Aims to Become No. 5 Oil Producer

Gazprom, the world's largest gas company, plans to quadruple oil and gas condensate output in the next few years and offer shares in its oil division to investors, deputy CEO Alexander Ryazanov was quoted as saying.

The company would boost oil and condensate output to 40 million metric tons a year (800,000 barrels per day) from 10 million tons, Ryazanov said, Vedomosti reported Monday.

Gazprom plans to earn $3 billion to $4 billion per year from marketing oil and gas condensate, up from current levels of $1.4 billion, the paper said.

If Gazprom, which produces around 540 billion cubic meters of gas and supplies Europe with a quarter of its gas needs, manages to quadruple its oil output, it would become Russia's fifth-largest oil producer.

Ryazanov said the group's oil subsidiary, Gazpromneft, would be set up as early as mid-2004, and Gazprom would hold 100 percent of its shares.

"But within two or three years it can be publicly floated," Ryazanov said. "Most likely, part of its shares will be offered on the stock market or to a strategic investor, but Gazprom plans to keep 51 percent of shares," he said.

"We understand that otherwise we will not be able to provide sufficient investment for our oil business."

Ryazanov said the new company would manage Gazprom's joint projects with oil companies, including the development of a Caspian offshore block with LUKoil and a Kara Sea offshore deposit with state firm Rosneft.

Ryazanov said Gazpromneft would export up to 40 percent of its condensate via the system of pipeline monopoly Transneft, a move that may significantly improve the quality of Urals oil, Russia's main export blend.

(Reuters, Bloomberg)