Gazprom may top $45 bln world capex record in 2011

Russian energy giant Gazprom may become a world leader in capital expenditures in the oil and gas sector this year as its 2011 investment is expected to hit almost 1.6 trillion rubles ($51 billion), Vedomosti business daily reported on Thursday. Gazprom's 2011 investment program, approved by its board in September, stipulates capital expenditures at 1.28 trillion rubles or $41.4 billion at the current rate. However, this figure does not take into account investment by Gazprom's oil arm, Gazprom Neft, and other energy subsidiaries whose total capital expenditures were disclosed only yesterday in Gazprom's Eurobond memorandum. The document estimates Gazprom's total investment for 2011 at about 1.57 trillion or almost $51 billion, making it the world leader in capital expenditures. Until now, the world leader by investment in the oil and gas sector has been Brazil's Petrobras whose program for 2011-2015 envisages $224.7 billion or almost $45 billion annually. Gazprom's Eurobond memorandum shows that the bulk of the energy giant's funds will be invested in the Yamal gas projects in the Russian Arctic, which Gazprom will have to implement in harsh weather conditions to make up for declining gas production at its three major West Siberian deposits - the Medvezhye, Yamburg and Urengoi fields. By 2020, the Yamal Peninsula is expected to account for 20-25 percent of Gazprom's output. So far, Gazprom can finance its investment program with its own funds. But this situation may change if Gazprom purchases any large assets, Denis Borisov, an analyst of Nomos Bank, told the paper. Gazprom has already warned investors that it may face difficulties in the future as competition in Europe is increasing, the Russian government is raising the tax burden and there are no guarantees that domestic gas prices administered by the Russian government will ever grow, the paper said.