Finland’s Gasum takes Gazprom to arbitration over gas price

Finnish natural gas incumbent Gasum has taken Russian producer Gazprom to arbitration over the price of natural gas in a long-term supply deal between the two companies, Gasum said on Friday.

Gasum’s current take-or-pay contract allows for a period of price renegotiation every three years and the two companies have been trying to come to an agreement since early 2014. The current deal lasts until 2027, according to Gazprom.

Gasum is seeking a lower price as it tries to improve the price competitiveness of natural gas in Finland.

Demand for natural gas in Finland has been falling for a number of years. Gasum said this is because of to the current Gazprom deal, lower coal prices and recent tax rises, all of which have made gas a less competitive fuel.

Total demand in Finland last year was 29.3TWh, 12% lower than in 2013, according to the Finnish Energy Authority. Almost all of consumed gas would have come from Russia with domestic biogas production accounting for a negligible amount.

As a consensus between both parties has not yet been reached the dispute has been taken to the Stockholm court of Arbitration, the Finnish company said.

“The arbitration process has already started,” Gasum spokeswoman Olga Vaisanen said.

She said it was unclear when the arbitration would end but that in the meantime Gasum would continue negotiations with Gazprom over the gas price.

Gasum, as both incumbent supplier and infrastructure owner in Finland, is one of the last remaining bundled natural gas companies in Europe. The company does not have to unbundle because Finland is completely reliant on Gazprom deliveries with its only point of interconnection the Russian-Finnish border point Imatra.

Gazprom holds a 25% stake in Gasum with the Finnish state holding the remaining 75%.

The construction of the Balticconnector pipeline between Finland and Estonia and a regional LNG terminal would reduce Finland’s reliance on Russian gas, but both projects are yet to receive a final investment decision (see separate story). thomas.rodgers@icis.com