Gazprom's summer sale

Russia's state-owned gas giant Gazprom will probably sell up to 2 billion dollars of dollar-denominated eurobonds this week.

The terms have yet to be set, but the issue is likely to go ahead despite volatile market conditions. Ahead of the roadshow, Gazprom said that its debt under the loan participation notes programme would at no time exceed 30 billion dollars. Back in May, it set the ceiling at 15 billion.

Gazprom's debt will continue to rise so that it can cover its recent spending spree: in the January-June period, total debt rose from 41 billion dollars to around 50 billion. Most funds went to cover the purchase of the 51% stake in the Sakhalin-2 project for 5.5 billion dollars and the acquisition of shares in Moscow city power utility Mosenergo for 4.5 billion. More credit is required to pay for the stake in Belarusian pipeline operator Beltransgaz and the ownership rights for the Kovykta gas field. While acquisitions are on the rise, Gazprom has reduced investment in some of its gas fields and pipeline infrastructure. This could be a symptom of abnormally warm winter and lower than expected revenue, but it will add to concerns about gas supply shortages -- both domestically and in Europe.