Novatek says demand to determine gas output growth

MOSCOW, Dec 23 (Reuters) - Russia's largest independent gas producer Novatek (NVTK.MM: Quote, Profile, Research) can increase production capacity to as much as 51 billion cubic metres (bcm) per year by the end of 2010 if gas demand is likely to rise, Novatek said on Tuesday.

In November, Novatek cut its 2008 gas output growth outlook to 8.5 percent from 10 percent or 30.8 bcm citing weak demand, but maintained plans to increase production to 45 bcm by 2010 and 65 bcm by 2015.

Mark Gyetvay, the gas company's chief financial officer, told an investor call Novatek would spend 14.2 billion roubles to 21.8 billion roubles ($501 million to $769.5 million) next year for a maximum production increase to 44 bcm by the end of the year if spending comes in at the top end.

Capital expenditure is planned at 28.30 billion roubles to 35.7 billion roubles for 2010 to raise capacity to a maximum 51 bcm.

"When the market demands additional volumes of gas, we will have the capacity to deliver these increased volumes of gas," Gyetvay said.

Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) controls just under 20 percent of Novatek.

Under any scenario, output will rise from this year's levels, company officials said on the call.

Russia's economy likely contracted in the fourth quarter of 2008, and is expected to post negative growth in the first two quarters of 2009, according to a Reuters poll of 15 analysts [ID:nRUPOLL].

However, Gyetvay said Novatek would maintain its practice of paying dividends on first half and full year earnings.

He gave net margin guidance of 23 percent to 25 percent and said the margin on earnings before interest, taxes, depreciation and amortisation would come in at 43 percent to 45 percent. (Reporting by Melissa Akin; Editing by Sharon Lindores)