Russia's Gazprom has reduced its forecast for natural gas output in 2015 to 427 Bcm, the first time this year it has forecast that production will drop.
The new forecast means Gazprom will likely be hit by the dual impact of lower gas prices and lower volumes this year, as domestic demand stuttered and uncertainties continue over the future gas demand landscape in Europe, its main export market.
In its third-quarter earnings statement, Gazprom again revised down its expectation for full-year gas output, with the latest projection representing a drop of 3.8% compared with production in 2014 of 445 Bcm.
Gazprom has reduced output forecasts for this year several times, on the back of lower Ukrainian shipments and warm weather, including in parts of Europe, at the beginning on 2015.
It is also despite Gazprom reporting a daily output record of 1.556 Bcm on October 22 as the peak heating season began and exports to Ukraine ramped up.
The latest forecast is in stark contrast to Gazprom's earlier expectations for its production this year.
In the spring, Gazprom forecast that gas production would rise strongly in 2015 to around 485 Bcm, returning output to levels last seen in 2013.
That was, however, before Ukraine in June halted all purchases of Russian gas for more than three months before resuming imports in October.
Gazprom in May reduced its forecast to 450 Bcm and then in August revised it down again, saying the company was planning to produce gas at the same level as last year, close to 445 Bcm.
INVESTMENT, EXPORTS
The latest production forecast of just 427 Bcm comes despite Gazprom last month revising upward its 2015 investment program by almost a third compared with a previous forecast as the gas giant pushes on with increased spending despite the stubbornly low price environment.
Gazprom's new plan for this year foresees spending of Rb1.043 trillion ($16.8 billion), up nearly 30% in ruble terms and about 18% in dollar terms compared with the program agreed at the end of last year.
The 2015 plan is also well up on last year's investments, which totaled Rb805.4 billion.
Gazprom deputy CEO Alexander Medvedev last month said its supplies to Europe and Turkey would be much higher than anticipated at close to 160 Bcm in 2015.
This was higher than originally expected -- earlier estimates were around 153 Bcm -- after stronger-than-expected sales in the second and third quarters.
That implies that it is lower demand on the Russian market that has triggered the production forecast decline.
