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No increase in natural gas spot indexation in Gazprom contract with E.ON

20 Jun 2012 19:56:54 | esgm

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Russia's incumbent natural gas producer Gazprom is expected to conclude an out-of-court price agreement with German supplier E.ON Ruhrgas in the near future, Gazprom Export CEO Alexander Medvedev said on Wednesday. He added the commercial part of the negotiations is completed.

The preliminary agreement does not include any increase in the share of spot indexation in the contract's pricing structure, according to Medvedev. "We have found a different mechanism [for the agreement]," he said.

Medvedev added the price agreements with E.ON had always included a small proportion that was linked to coal prices and this share would be preserved in the new arrangement.

Gazprom is soon also hoping to come to an agreement with Polish PGNiG and German RWE, which are the remaining two companies that turned to court arbitration in order to obtain more favourable pricing conditions with the Russian producer.

Medvedev singled out PGNiG, saying that the gas price for the Polish incumbent will be reduced by 7-10% from the current contract.

Export volumes

Speaking about exported volumes, Medvedev said that Gazprom's total exports, including Europe and the former Soviet Union reached 221.1 billion cubic metres (Gm³) in 2011, 150Gm³ of which went to European countries.

This year, Gazprom is planning to physically export a minimum of 222Gm³, excluding virtual volumes delayed under any take-or-pay clauses. In the meantime, exports during the first five months of this year dropped by about 10Gm³ year on year, from 72Gm³ exported in January-May 2011, according to Medvedev.

DEPA privatization

Medvedev also reiterated that Gazprom is still interested in the privatisation of the dominant Greek natural gas provider, DEPA (see ESGM 7 June 2012).

"We will be ready to make a binding offer [when the new government resumes the DEPA privatisation process], provided there are no restrictions made on Gazprom," Medvedev said. KZ

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