(25 EUR, -0,28%) Chief Executive Officer Alexei Miller said Russian natural gas in Europe may cost 22 percent more by January as energy prices reach new highs. The price for 1,000 cubic meters will exceed US$500 this year, Miller told reporters in Baku, Azerbaijan, today. Miller said last month that European customers were paying about US$410 per 1,000 cubic meters.
Current record high crude oil prices imply an increase in gas prices from the beginning of the year (given a 6-9 months lag in pricing). This means very hard times for (3 PLN, -0,32%), as the domestic tariff on the natural gas stands at US$ 390/mcm now, which implies more than US$ 100/mcm gap. We expect the company to apply for new tariff increase from January 2009. The tariff decision will be of a vital importance for 2009 performance of the company. Until the end of the year, however, the sentiment on the stock might be negative.