Russia's Gazprom to slash 2015 capex by some $8bn
Russia's Gazprom to slash 2015 capex by some $8bn.Reuters

Russian energy giant Gazprom has said it will slash capital expenditure this year by almost $8bn (£5.3bn, €7bn) to $30bn, as market and political developments spawn a tough business environment.

But Gazprom said the cuts will not affect its plans to build gas pipelines to China by the end of the decade.

While Gazprom said it was not directly affected by European and US sanctions against Russia, the firm has logged a sharp drop in third-quarter 2014 net profit, pulled down by the tumbling rouble and after exports to Ukraine were frozen over a pricing row.

The world's biggest exporter of natural gas also said that Asian demand will keep natural gas's share of global energy supplies stable at almost 25% over the next 15 years despite stalling consumption in Europe, but that crude oil and coal will lose some market share to clean energy and nuclear power, Reuters reported.

Andrey Kruglov, Deputy Chairman of the Management Committee and Head of the Department for Finance and Economics at Gazprom, told a webcast: "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."

Gazprom exports natural gas largely through pipelines to Europe, but also on ships as liquefied natural gas (LNG) to Asia. The firm is also active in the oil and power sectors.

The energy producer's revenues have tanked in the wake of the oil rout. Gazprom has also been hit by the tensions between Russia and Europe over the crisis in Ukraine, which provides the vital transit route for Gazprom's gas to customers in the European Union.

Gazprom's capex averaged some $44bn between 2010 and 2013.