Russia's Gazprom sees investments, debt repayments peaking in 2018-2020

MOSCOW (Reuters) - Russian gas giant Gazprom said on Tuesday it expected debt repayments to peak in 2018 and investments to peak between 2018 and 2020 as it boosted spending on major pipeline projects.

The logo of Russian gas giant Gazprom is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. Picture taken June 1, 2017. REUTERS/Sergei Karpukhin

Gazprom, which is involved in building three major gas pipeline projects to Europe, China and Turkey, frequently draws criticism from analysts who say it should rein in spending.

Gazprom expects its average annual investment until 2035 to be capped at 1 trillion rubles ($17.5 billion).

Gazprom Group, which combines the gas business with the Russian firm’s oil and power generation units, expects to spend 1.28 trillion rubles on investment this year.

Gazprom Chief Financial Officer Andrey Kruglov told investors in New York that the company would continue to be a big spender in the coming years, adding that its debt repayments would reach a high of more than $13 billion in 2018.

A negative net cash flow was fairly likely both this year and next, he added.

The state-controlled Russian company is facing political resistance in Europe, particularly over Moscow’s role in the Ukrainian crisis, but it still plans to boost its share of the European gas market.

Gazprom, whose gas business relies on pipelines, is also facing steeper competition from producers of liquefied natural gas (LNG), which can be shipped from sources around the world.

“It is not only Gazprom, but foreign analysts as well recognize Russian pipeline gas’ competitiveness in comparison to LNG,” Kirill Polous, a Gazprom senior manager, told investors in New York.

Gazprom’s three major pipeline projects are the Power of Siberia pipeline to China, Nord Stream-2 to Germany and TurkStream to Turkey and Southern Europe.

Gazprom aims to boost gas production and exports.

By 2020, the company said it would produce 15 percent more gas than in 2016. In 2018, it would produce 476 billion cubic meters (bcm) of gas, compared to 471 in 2017, Gazprom said.

($1 = 57.0745 rubles)

Reporting by Vladimir Soldatkin, Oksana Kobzeva in Moscow and Jessica Resnick-Ault in New York; Writing by Polina Ivanova and Vladimir Soldatkin; Editing by Edmund Blair