SINGAPORE, Feb 3 (Reuters) - Russia’s state-controlled Gazprom said on Tuesday it would slash its capital expenditure this year by almost $8 billion to $30 billion as political and market developments created a challenging business environment.
With oil prices down by half in the last six months, energy producer revenues have fallen sharply, and Gazprom has also been hit by the political tensions between Russia and Europe over the crisis in Ukraine, which is the most important transit route for Gazprom’s gas to its customers in the European Union.
Gazprom said it would slash its capital expenditure by almost $8 billion between 2014 and 2015 to $30 billion, and down from a peak of an annual average of almost $44 billion between 2010 and 2013.
“The overall market development does cause some challenges to our business... (but) the considerable reduction of capex allows us to show a very strong cash flow generation,” Andrey Kruglov, Deputy Chairman of the Management Committee and Head of the Department for Finance and Economics, told a webcast. (Reporting by Henning Gloystein; Editing by Ed Davies)