Gazprom agreed to ?slight modifications? to gas contract terms after discussions with European clients.
Gazprom agreed to ?slight modifications? to gas contract terms after discussions with European clients including Germany"s E.On, deputy chief executive Alexander Medvedev said Thursday. The contracts haven"t been renegotiated, he told reporters in Berlin.
Long-term contracts, based on the price of crude and oil products with a time lag, had traditionally allowed Germany"s biggest utility access to cheaper gas than it could get on the open market. This changed last year when gas spot prices slid even as oil rallied amid a slump in industrial gas demand and rising shipments in liquefied natural gas to Europe.
Details of the changes couldn"t be revealed because the documents with E.On haven"t been signed yet, Ilya Kochevrin, a Gazprom spokesman, said by phone from Berlin. E.On spokespeople were not immediately available to comment. The contract discussions were mainly held with E.On, the spokesman said.
Germany is Gazprom"s biggest export market outside the Commonwealth of Independent States.
Benchmark natural gas futures in the United States fell 25 percent last year while oil prices jumped 78 percent.
E.On chief executive Wulf Bernotat said in November that some volumes can be postponed ?far into the future? and reported ?some success? in the discussions.
Gazprom has said it will keep take-or-pay clauses, in which buyers are obliged to take contracted deliveries or pay for unused supplies, and maintain a link to oil because it secures the stability of the gas market. The company, which meets about 25 percent of Europe"s demand, said earlier this week that it plans to review its marketing policy at a board meeting Jan. 26.
The global economic crisis cut Russian gas exports 10.3 percent to 167.1 billion cubic meters last year, according to the Energy Ministry"s CDU-TEK unit. Increased shipments of LNG also threatened Gazprom"s market share, according to Troika Dialog.
?Europe was last year flooded with LNG on offer at a price much lower than the price under Gazprom"s long-term contracts,? Troika Dialog said in a note this week. ?As a result, Gazprom and some other pipeline gas suppliers to Europe have lost part of their markets which they may not regain.?
The share of LNG in European gas demand is expected to rise to 13 percent in 2012 from 7.5 percent in 2007, Troika said. ?Qatar, Russia"s new competitor on the European market, will secure the largest chunk, 44 percent, of the slated increase in world LNG capacity by 2013.?
The International Energy Agency said in November that there may be an ?acute glut? in gas worldwide in the next few years because of rising production in the U.S. and Canada. Supplies may outpace annual demand growth of 2.5 percent between 2010 and 2015, the IEA said in its annual World Energy Outlook.