BAKU, July 3: Russian energy giant Gazprom forecast on Thursday that the price of oil would “very soon” rise to $250 per barrel, bringing higher gas prices for European customers in its wake.

“We expect that the price of oil will reach $250 per barrel very soon,” the chief executive, Alexei Miller, told journalists on the sidelines of a visit to energy-rich Azerbaijan by President Dmitry Medvedev.

Miller also said he expected Russia’s oil production to level off in the next few years. Analysts say one of the reasons for higher oil prices is that production is failing to catch up with growing global demand.

“We expect to produce the same volume of oil this year as we did last year,” Miller said. “In the next few years, we expect that the volume will remain at the same level.”

Russia is the world’s second-biggest producer and exporter of oil after Saudi Arabia. Gazprom is a state-controlled gas monopoly that also owns Russian oil major Gazprom Neft and has plans to expand its oil business further.

Miller also warned that gas prices for the European Union will rise to $500 per 1,000 cubic metres by the end of 2008 from their current level of under $400 on the back of higher oil prices.

If the price of oil rises to $250 per barrel, then gas export prices will rise further to $1,000 per 1,000 cubic metres, he said. The European Union relies on Russia for a quarter of its gas and oil supplies.—AFP