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NOVATEK confirms 2Gm3/year natural gas deal with EnBW

14 Aug 2012 23:01:06 | esgm

Russian NOVATEK Gas & Power has signed a 10-year natural gas supply contract for 2 billion cubic metres (Gm³)/year with German utility EnBW, NOVATEK's CFO Mark Gyetvay confirmed on Tuesday.

EnBW announced in July that it had signed a gas supply contract direct with a gas producer but without specifying who the supplier was (see ESGM 12 July 2012). At that time NOVATEK told ICIS it was not involved in the deal (see ESGM 23 July 2012).

EnBW said the contracted gas would cost the utility about €600m/year and represented about 37% of its supply portfolio.

The price of the contracted gas would be partly connected to wholesale hub prices and the pricing formula was linked to an NCG curve contract, according to EnBW.

NOVATEK is Russia's largest independent power producer - NOVATEK Gas & Power (Zug) is the company's Swiss-registered trading affiliate.

Gyetvay said the deal with EnBW would be based on the trading operations of NOVATEK Gas & Power.

Gyetvay would not comment on whether the gas would be procured from Russia or bought on the European spot market, nor would he say whether Russian Gazprom would be involved in any way or whether the gas would be brought in through the Nord Stream pipeline.

Gyetvay previously told ICIS that NOVATEK had been considering several options to reach European customers: via trading operations, through direct contracts with European importers or through agent agreements with Gazprom. ICIS understands, however, any agency agreement with Gazprom would be limited to LNG.

In the first half of this year, NOVATEK's Russian gas production increased to 25.5Gm³ from 22.6Gm³ during the first half of 2011. In the second quarter of 2012, output reached 12.5Gm³ from 10.7Gm³.

NOVATEK purchased 1.7Gm³ of gas in the first half of the year while no gas purchases were recorded during the first half of 2011 (see ESGM 13 August 2012).

In May of this year, it was reported that NOVATEK had approached the Russian government asking permission to export pipeline gas to Europe. Currently Russian law gives government-controlled incumbent Gazprom the exclusive right to export gas. ES

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