European natural gas suppliers seek more discounts from Gazprom

22 January 2013 17:43 Source:ICIS
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Several European suppliers have applied to Gazprom with requests for a review of long-term natural gas contract prices, the company's export affiliate Gazprom Export confirmed to ICIS on Tuesday, including WINGAS, Austrian Econgas and Gaz de France.

A number of Gazprom's long-term contracts were coming up for review in 2013, as provided in the normal contractual conditions, according to Sergey Chelpanov, Gazprom Export's deputy general director. "This is normal behaviour on the part of buyers in today's unstable market conditions", he said, adding: "It's difficult to say what the outcome will be."

Chelpanov also said there was no universal formula applied in the review of contracts, though prices were generally indexed to oil products. He said in 2012, Gazprom adapted its contracts to market circumstances - some contracts included spot indexation.

Last year Gazprom discounted its long-term gas price to a number of companies including German WINGAS and E.ON Ruhrgas, Italian Eni, Austrian EconGas, Slovak SPP (see ESGM 17 January, 2012). Later in the year, the Russian producer also revised its contract prices with Polish PGNiG. At the beginning of 2012, Gazprom said the level of discount was 7-10%. However the Polish treasury minister said Poland's gas discount was higher than 10% (see ESGM 7 November, 2012 ).

It is telling that Wintershall, a long-term Gazprom partner, signed a supply contract towards the end of 2012 with Norwegian Statoil for the purchase of 45 billion cubic metres (Gm³) of gas over 10 years, with some volumes indexed to the NCG and GASPOOL hubs (see ESGM 20 November, 2012).

Gazprom has generally tried to avoid significant changes to the structure of the pricing formula, including oil indexation, and has found other means of dropping the contract price, though it is understood small changes have been made to the formulae in some contracts. Whether the latest round of contract renegotiations will affect the structure of the pricing formula remains to be seen. ES

By Elizabeth Stonor