Gas plans: at gazprom
Gazprom eyes gas deals revamp
Russian gas giant Gazprom hinted today that it could adjust its long-term deals with European customers to avoid imposing huge fines on them for reduced gas purchases.
The comments came as industry analysts claim Gazprom is having a tough dialogue with its customers in Europe under which they must buy a minimum amount of gas or pay fines, a clause known as take-or-pay under long-term contracts.
European companies, for their part, say they would stick to current terms and practices despite complications, while some observers note that Gazprom is in danger of losing its share in Europe's market, which it supplies with more than a quarter of imported gas.
"Long-term contracts will stay in place, but they might be changed," Reuters quoted Sergei Komlev, head of contract structuring and price formation at Gazprom Export, Gazprom's exporting arm, telling a conference organised by the Association of European Business.
His chief, Alexander Medvedev, said earlier this week that some companies are facing take-or-pay problems but he still expected Gazprom's European customers to fully take volumes of contracted gas.
The discussions were fuelled by a report that European customers owe Gazprom $2.5 billion under take-or-pay provisions.
Representatives of European companies today tried to downplay the issue, saying they will fulfill the contractual obligations.
"All obligations should be met.... Long-term contracts are the backbone of the business," Uwe Fip, senior vice-president at E.ON Ruhrgas, told the news agency.
"Long-term contracts play a pivotal role and they will remain attractive," Xavier Perret, general delegate in Russia from GDF Suez added.
Former Russia's deputy energy minister Vladimir Milov in comments published in Vedomosti business daily said that Gazprom suffered big losses in the European market due to its inflexible pricing policy and inability to defend its interests.
He also said the prospects of restoring Gazprom's share in Europe were not clear because of uncertainty about economic recovery and due to competition heating up in the international gas market.
"In such conditions, the long-term take-or-pay contracts, with offtake gas volumes and price - pegged to the cost of oil - fixed for many years, will soon became hopelessly archaic," he said.