Gazprom compromises tariffs with Europeans

Russia’s Gazprom Export, a subsidiary of gas monopoly Gazprom has revised tariffs for five European customers and tied its long-term contracts to prices for crude and refined oil products.

Gazprom revised tariffs with Wingas (Germany), GDF Suez SA (France), EconGas GmbH (Austria), SPP AS (Slovakia) and Sinergie Italiane Srl. These companies purchase around 35 billion cubic meters (bcm) of gas every year or about a quarter of all Russian gas exports to Europe.“Gazprom Export reached agreement with a number of major European  purchasers, which  involve  certain adjustments  to  the price for  Russian  gas purchased  under  these contracts,  taking  into account the gas market in Europe and the situation with the economy  and energy sector of certain European states”, Gazprom’s Deputy Chief Executive Officer Alexander Medvedev, in charge of the exports unit, said in a statement.Gazprom is in the middle of talks with several other major European importers, and in arbitration with RWE AG’s Transgas unit, EON Ruhrgas, Erdgas Import Salzburg GmbH and Poland’s PGNiG, according to a bond prospectus released in November.The european companies have been pressing for lower contract tariffs as supply of gas in the region is outstripping demand due to a warm winter pushing down the market price.The price of Gazprom's long-term contracts tied to oil fell slightly to $480 per 1,000 cubic meters, while the European spot market offers gas for just $300.Konstantin Simonov from Russia’s National Energy Security Fund thinks the Gazprom long-term contracts’ costs cut might be a risky step to make. “Spot market is a very provocative thing, because everybody tries to see the situation with gas prices in the US. Now price in the US is a bit more than $100, price in Europe is more than $400. European regulators are sure, that spot market means cheap gas. It’s not true. Spot market is unpredictable market. Today you have the price $100, tomorrow you can have $500, that’s why my idea is very simple: the construction of spot market is a be very risky story for the EU, that’s why it can be a mistake”.