Gazprom faces up to shrinking production.(Company Profile)

The seemingly impregnable position of Russia's Gazprom as the world's leading gas exporter is starting to show some cracks. Production is falling as fields deplete, and investment in developing new reserves is failing to keep up with the pace of demand

At the start of this month, Gazprom reported the discovery of huge gas deposits on the shelf of the Kara Sea in the Russian arctic north. The news points to the company's urgent desire to expand its reserve base in order to avert a potentially disastrous plunge in output.

Gazprom board member Boris Nikitin says probable reserves of the recently explored Kamennomysk and Sevemo-Kamennomysk fields in the Kara Sea could be as high as 1 trillion [m.sup.3] of natural gas. And total gas reserves in the area's six blocks are estimated at 3-4 trillion [m.sup.3].

This year, Gazprom could invest as much as $10mn in exploration drilling in the area, with commercial production due to begin in 2007. By 2010 the company plans to produce 50bn-56bn [m.sup.3]/yr from …