Gazprom’s spot-linked natural gas price share unchanged

Gazprom has made no major change to the share of natural gas volumes linked to spot prices in its supply contracts during the past year, Sergei Komlev, Gazprom Export’s head of contract, structuring and price formation directorate, told reporters on the sidelines of the European Gas Conference in Vienna.

In 2010, the percentage of gas volumes charged according to prices at liquid traded hubs was estimated at 7%.

Russia’s natural gas major Gazprom has agreed to make unspecified price adjustments to its long-term supply contracts with France-based GDF SUEZ, Germany’s Wingas, Slovakia-based SPP, Italy’s Sinergie Italiane, and Austria-based Econgas.

Komlev declined to answer what exactly Gazprom had changed in its recent price adjustment for five European customers.

On Monday, GDF SUEZ said it had increased its share of long-term contracts indexed to the spot gas market, from 10% to 25% after negotiations with its suppliers (see ESGM 23 January 2012).

Apart from Gazprom, GDF SUEZ is mainly supplied by Statoil, Sonatrach and Gasterra. The company did not say which contracts had been changed to boost the spot market link.

GDF SUEZ was unavailable for comment on Thursday.

Gazprom backs hybrid price model

Komlev spoke in support of Gazprom’s existing pricing model, which he called a hybrid where oil-indexed prices play a leading role and spot-indexation has a balancing and subordinate role.

Komlev said that spot gas prices at European hubs had been depressed due to the market oversupply situation when local companies chose to sell excess gas from their contracts with national importers on the spot markets. These contracts, because of their shorter length (usually 1-3 years) no longer include a “make-up gas” option, which is standard in importer-exporter contacts and allows Gazprom’s direct customers to delay uptake of their contracted gas under a take-or-pay clause until later time.

“This has been the main reason for the divergence between spot and contract prices… If that make-up gas was not available there would have been no major divergence between hub and contract prices,” he said. KZ