Investors don’t fully appreciate the market opportunity Gazprom (MCX:GAZP) has in Europe, according to Sanford C. Bernstein & Co., LLC Analyst Oswald Clint. He says Gazprom grew volumes 16% last year, in part as a result of European sales, and he expects an even greater increase this year.
“Even though North America might have a lot of gas and low gas prices, that’s not the case anywhere else and certainly not in Europe, where our gas price is three times higher than U.S. gas prices, and we don’t have any shale gas, we don’t have any LNG coming here because Asia is bidding us out of the market, and our domestic gas supply is falling at 6% every single year,” Clint says. “The only company or entity that can solve that problem right now is Gazprom.”
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In addition to opportunities in Europe, Clint says he expects Gazprom to make headway in China in 2014. He says the Russian gas company could sign a significant new gas deal in China by the end of the first quarter.
“So it maybe inefficient and may be an arm of the state, but they have 100 billion barrels oil equivalent of conventional natural gas, and they can pump it through pipelines into Europe any single minute of the day, and that’s what they did last year,” Clint says. “It is probably the cheapest energy stock in the world at the moment.”
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