Moscow (Platts)--9Nov2012/1033 am EST/1533 GMT

Russia's Gazprom Neft expects to increase its associated gas utilization rate to 80% in December and boost it further to 95% in late 2014, the company's CEO Alexander Dyukov said Friday.

Under legislation effective from January 2012, Russian companies have to utilize up to 95% of their associated gas or face significant fines by the authorities.

In 2012, Gazprom Neft is to pay around Rb800 million ($25 million) in fines for not meeting the requirement, compared with Rb30-40 million it paid in fines last year, Dyukov said.

The legislation is designed to stop massive gas flaring. Russian companies produced 65.4 billion cubic meters of associated gas in 2010, of which 15.7 Bcm was flared, Russia's energy ministry said. Gazprom Neft flared 2 Bcm in 2010, with its utilization rate at 52.8% at the time, but has completed a number of projects to increase gas utilization levels recently, Dyukov said.

These include West Siberian Vyngapur gas processing plant owned by Sibur petrochemical company, which will process associated gas from Gazprom Neft's five fields in the region.

The project, which allows Gazprom to boost its utilization rate to over 80% from 61% previously, was completed in September.

--Nadia Rodova, nadia_rodova@platts.com --Edited by Martin O'Rourke, martin_orourke@platts.com