Russian gas monopoly OAO Gazprom (GAZP.RS) Tuesday raised its 2008 capital spending plans to a new record level, as it gears up to bring key new fields online.
Gazprom said total investments, including acquisitions, would reach 821.7 billion rubles ($35.4 billion), which is RUB111.5 billion more than under an initial plan from December.
Capital spending, which has been raised 11% to RUB531.2 billion, or over half of total investments this year, will mainly go towards the development of new fields in the Arctic, East Siberia and the country's Far East, the company said.
During the next decade, Gazprom intends to launch new key fields, such as Bovanenkovskoye on the Yamal peninsula and Shtokman in the Barents Sea. Both fields are located in harsh climates, which demands higher investment.
The move comes amid widespread concerns that Gazprom isn't investing enough in new fields to make up for falling output at its main maturing fields in West Siberia.
"They really have a lot to do and the sooner they develop these fields the better," said Tatiana Kapustina, an analyst at Deutsche Bank in Moscow.
The Paris-based International Energy Agency, or IEA, has repeatedly urged Gazprom to invest more in upstream activities in order to meet rising demand in Europe and domestically. The company, however, says it can increase production at any moment if demand rises.
Gazprom also said it needed the additional funds to finance the Sakhalin-2 project in Russia's Far East, in which it owns obtained a controlling stake in 2006, and the Nord Stream project - a gas pipeline, which it plans to bring online jointly with German energy companies to ship natural gas to European consumers.
Gazprom, which currently supplies a quarter of Europe's gas needs, has repeatedly stated its plan to raise its capitalization to $100 billion by 2020 and that it intends to become one of the world's three largest companies.
At 1350 GMT, Gazprom 's shares traded down 2.1% at $13.2, valuing the company at $314 billion.