Updated: Norway’s Statoil signs spot-indexed natural gas deal with Wintershall

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Norwegian producer Statoil has signed a 10-year spot-indexed natural gas supply deal with German oil and gas firm Wintershall mainly linked to the NCG and GASPOOL hubs, Statoil confirmed on Tuesday.

The deal will see Wintershall, a subsidiary of chemicals giant BASF, receive 45 billion cubic metres of gas over the 10-year period, the Norwegian oil and natural gas giant said.

Existing pipelines from the Norwegian continental shelf will be used to deliver the gas, with the vast majority beaching in Germany.

A Statoil spokesman declined to give specifics on how much of the deal was indexed to the German hubs but added that there was some indexation towards other northwest European gas hubs such as the TTF in the Netherlands, ZTP in Belgium and NBP in the UK.

The news comes almost a month after Statoil announced that it had renegotiated around half of its gas contracts during its third quarter results presentation (see ESGM 26 October 2012).

The company’s chief executive Torgrim Reitain had said the move was part of a modernisation of its natural gas contract portfolio, “which is about taking back flexibility and changing the structure of some of those contracts”.

According to one natural gas trading analyst, the latest Statoil-Wintershall deal is an indication of how spot market indexation is becoming more prevalent in the natural gas market.

Arbitrage

One trader said that although such deals were good for potential buyers, increased contract flexibility would increase market efficiency but reduce arbitrage opportunities.

“It will mean that [time and country] spreads will be reduced further, as well as meaning that more and more contracts will be indexed to spot prices,” he said. “This will increase transparency of prices for industrials and end-users of gas. However, opportunities for traders will reduce as spreads shrink.”

Statoil announced in late October that it was to sell down its minority stakes in three oil and natural gas fields to Wintershall in exchange for up to $1.45bn (€1.12bn) and a 15% share in an oil prospect (see ESGM 22 October 2012).

The exchange of assets is effective from 1 January 2013 and is expected to close in the second half of that year, pending governmental approvals. The deal signalled a move by both companies to secure long-term growth on the Norwegian Continental Shelf (NCS).

And last week, it emerged that Wintershall will receive a 25% plus one share in two gas and condensate deposits in the Urengoy field in Siberia, including the option to increase the share to 50%, should an asset swap between Russia’s Gazprom and BASF be approved (see ESGM 14 November 2012). KA/FOR