Gazprom says gas prices to keep rising

By Peter Dinkloh

LEIPZIG, Germany (Reuters) - Russia's Gazprom (GAZP.MM), which supplies a quarter of Europe's natural gas, expects gas prices to keep rising, dragged higher by oil, Chief Executive Alexei Miller said on Wednesday.

The price for 1,000 cubic meters of gas is already $410, a third more than Gazprom's prediction last year of $310, he told reporters, offering scant hope for relief from rising energy costs.

"The tendency for a rising gas price is set to hold on," he said at an event to mark the 35th anniversary of Russian gas deliveries to Germany. He was not more specific.

"For users, this situation is dramatic," he said.

Europe's gas prices are mainly based on long-term contracts which are tied to the price of crude oil with a time lag of about half a year.

Crude oil prices have broken historical records since last year and peaked at $139 a barrel on Friday. Moscow-based Gazprom, which holds the world's largest reserves of natural gas, on Tuesday predicted $250 per barrel for next year.

Of fossil fuels, natural gas produces the least amount of carbon dioxide at a time when the European Union has ambitious targets to cut CO2 emissions.

Europe's dependence on Russian gas is growing, but Miller cautioned there was no need to worry.