Russia's Gazprom predicts $250 oil in 2009

By Tom Bergin

DEAUVILLE, France (Reuters) - Russia's Gazprom (GAZP.MM), the supplier of a quarter of Europe's natural gas, expects the price of crude oil to almost double within 18 months and to take gas prices higher with it.

"We think it will reach $250 a barrel in the foreseeable future," Chief Executive Alexei Miller told reporters at a presentation in France, adding high demand rather than speculation was the primary factor for high hydrocarbon prices.

A spokesman said the company, which is also one of Russia's largest crude producers, expected the price to hit the $250/barrel level sometime in 2009.

Gazprom exports gas to Europe at prices linked to oil products. Miller said the current gas price was $410 per 1,000 cubic meters and Alexander Medvedev, Miller's deputy, said prices were likely to rise to reflect the higher cost of crude.

Analysts said that using the $250/barrel forecast and the conversion factors cited by Medvedev at the presentation, one would arrive at a gas price of $1,500 per 1,000 cubic meters.

"It's crazy ... maybe they know something we don't," said one analyst, who bemoaned the lack of analysis to back up the forecast.

"Usually one give a lot of analysis to back up that kind of forecast," he said.

The comments came as the oil price sat at around $134 a barrel, a few dollars short of last week's record level.

State-controlled Gazprom plans to double oil production by 2020. This goal could be reached sooner through the acquisition of a stake in TNK-BP, Russia's third-largest oil producer, and industry sources said Gazprom was interested.

Medvedev said Gazprom will only consider investing in TNK-BP after its shareholders have settled a dispute over control of the company.

TNK-BP is half owned by oil major BP (BP.L) and half owned a group of Russian billionaires who have criticized management at the company.

DIVERSIFICATION IS USELESS

Miller criticized European efforts to reduce reliance on Russia, which analysts expect to provide a third of EU gas in the years ahead, and slammed attempts to limit Gazprom's ability to buy gas distribution assets in the bloc.

Miller said it was Gazprom's strategy to be vertically integrated with operations from the well-head to the consumer in Europe and other continents.

Some European politicians have expressed concern about Gazprom buying up downstream assets in the EU saying the Kremlin could use these assets to exert political influence in the future but Medvedev said the investments were commercial.