German Bayerngas to close spot-linked gas supply deal with WINGAS
Bayerngas, a joint venture (JV) of German utilities, is close to signing a long-term supply contract with WINGAS, a JV between Wintershall and Gazprom, with a price formula linking some volumes to gas spot prices, the company said at its annual press conference in Munich on Monday.
The contract price will be linked partly to the price of gas traded at European spot markets and partly to the oil price. Under the deal, Bayerngas will receive up to 11TWh - or 1 billion cubic metres (Gm³) - of gas per year for a period of three years, starting in 2013, Bayerngas managing director Marc Hall said on the sidelines of Monday's conference.
The agreement is the result of rather tough price-adjustment negotiations of the current long-term oil-indexed supply contracts between the two companies. In April, the District Court in Frankfurt dismissed a case filed by Bayerngas against WINGAS (see ESGM 6 April).
Hall said on Monday that the lawsuit's goal was to achieve price adjustments retroactively for Gas Year 2009/10. "Fortunately, we were now able to find a solution for Gas Year 2009/10 as well as 2010/11, and also for the future", he said, adding that WINGAS had, in the end, proven to be a quite flexible partner.
The long-term supply contract between Bayerngas and E.ON Ruhrgas will run out at the end of the current Gas Year. "We are in talks with Ruhrgas, but so far, there has been no offer which is acceptable to us," Hall said.
The current oil-indexed contracts put pressure on the results for Bayerngas for 2010, with long-term prices sitting well above spot prices at the European trading hubs, the company said on Monday. As a result, the group's revenue decreased from €2.01bn in 2009 to €1.74bn last year, while gas sales remained stable.
Bayerngas sold 69TWh of gas in 2010, about 2% less than in 2009 (see ESGM 31 March 2011).
Bayerngas aims to continue focusing on gas production and trading, according to Hall. In 2010, the portion of gas procured by its subsidiary, Bayerngas Energy Trading, at the hubs went up by 30.9%, from 13.3TWh in 2009 to 17.4TWh last year.
The Oslo-based production subsidiary Bayerngas Norge holds more than 50 production licences. In December 2010, the company started its first gas production in Norway at the Vega gas field, which was brought into operation in a venture that includes Norwegian energy major Statoil (see ESGM 2 December 2010). Bayerngas Norge's total share in Vega's reserves amounts to 2.6Gm³ of gas equivalent.
At the beginning of this year, the subsidiary brought its second Norwegian gas field into operation, with a share in the Trym field reserves of 2.3Gm³ of gas and 550,000m³ of condensate (see ESGM 14 February 2011). According to Hall, the shareholders of Bayerngas Norge aim to invest a total of about €1.5bn by 2015.
In addition, the Bayerngas subsidiary Bayernets plans to build a 150km pipeline, called Monaco, travelling east to west through southern Germany, Hall said on Monday. He did not elaborate on the expected capacity, a concrete timescale or the planned investment.
According to Hall, the decision to expand the original grid infrastructure projects was driven partly by Bavaria's new energy concept, which is based on an increase of power generation from natural gas in order to achieve an accelerated phase-out of nuclear energy by 2021 (see ESGM 3 May 2011).
The energy strategy includes the construction of new gas-fired power plants in Bavaria, which will need to be connected to grid infrastructure and make network investments necessary. JR
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