* Reserves $4.7 bln for 2013 refunds to European customers
* Says 2012 dividend safe at 7-8 roubles vs 8.97 in 2011
* Free cash flow seen at $1 billion in 2012
* Gas exports to Europe seen at 152 bcm in 2013 (Adds detail, analyst quotes)
By Olesya Astakhova and Vladimir Soldatkin
MOSCOW, Feb 8 Gazprom, the world's top gas producer, expects to hand $4.7 billion in price cuts to European consumers this year, company officials said on Friday, and vowed to make good on dividend promises despite the cash flow hit.
Customers and competitors have been pressing the state-controlled company to cut its prices in Europe, where it generates nearly 60 percent of its revenues from gas sales.
In response to falling demand due to Europe's economic slump, energy efficiency drives and competition from liquefied natural gas, especially in its main market, Germany, it has amended long-term contracts with some European clients.
Gazprom set aside 133 billion roubles ($4.4 billion) for 2012 refunds, and said on Friday it paid out only $2.7 billion.
Analysts say price concessions to the likes of Polish gas monopoly PGNiG, may help Gazprom rebuild its one-quarter share of the European market, and meet its goal of raising gas exports to Europe by 10 percent this year to 152 billion cubic metres (bcm).
"It looks like Gazprom may sell at least 150 bcm to Europe. Last year was very bad for them, while they also offered some discounts for their gas," Uralsib analyst, Alexei Kokin, said.
Sources have told Reuters that Gazprom may cut gas prices to Europe this year to levels comparable to those on the spot market, where prices undercut the formula linked to oil prices in Gazprom's long-term contracts.
Rival suppliers such as Norway's Statoil have adapted pricing policies proactively to increase gearing to prices on Europe's increasingly active gas trading hubs.
Among other challenges, domestic rivals, led by independent producer Novatek, want to overturn Gazprom's monopoly on exporting gas, enshrined in a 2006 law. Novatek has been lobbying for the rights to export liquefied natural gas by ship.
President Vladimir Putin's energy policy commission is due to meet next Wednesday to discuss the Novatek proposal, which reports suggest has won backing from Rosneft, the state oil major headed by longtime Putin ally Igor Sechin.
CHALLENGING DIVIDENDS, SPENDING SPREE
Gazprom's declining cash flows have called into question its ability to boost dividends while funding vast investment projects, including plans to expand its pipeline export routes that will cost tens of billions of dollars.
Analysts who saw an investor presentation in Moscow on Friday said Gazprom aimed to pay 2012 dividends of 7 to 8 roubles per share, down from 8.97 for 2011. But for the current year it expects dividends to rise to between 8 and 9 roubles.
The sources said Gazprom plans to post free cash flow of only $1 billion in 2012, which may force it to borrow in order to pay those dividends.
Gazprom shares fell 1.3 percent by 1230 GMT, underperforming the wider market, which eased 0.8 percent.
Gazprom also said it expected 2012 net income to be $38 billion, down from $45 billion in 2011. It usually pays about 25 percent of net profit to meet Russian accounting standards.
The company has earmarked $40 billion for 2013 capital expenditure, compared with $44 billion in 2012. But spending may rise further as Gazprom tends to revise it upwards during the course of the year.
Gazprom has directed the bulk of investment to develop major fields, such as Bovanenkovo, in regions such as the Arctic's Yamal Peninsula as it tries to stem any decline in gas output.
Gazprom has also embarked on a number of politically motivated projects with dubious economic benefits, such as the South Stream underwater pipeline, designed to bypass transit states such as Ukraine through which its export pipelines run.
The company estimates the cost of the project at $39 billion, while some analysts say it may eventually rise to as much as $55 billion due to needs to upgrade and expand domestic pipelines to make them compatible with this link.
Gazprom reckons it has money left over to sponsor top-flight soccer clubs Zenit St Petersburg and German Bundesliga team Schalke 04, and spend as much as $2.4 billion on a 462-metre tower in St Petersburg planned as its new headquarters.
Energy revenues in Russia are heavily taxed to fund social spending. The government is also keen that high dividends are maintained by state entities as another way of skimming income from the energy industry. ($1 = 30.2350 Russian roubles) (Additional reporting by Denis Pinchuk; Editing by Louise Ireland and Douglas Busvine)