OAO Gazprom (GAZP), Russia’s natural-gas export monopoly, will return at least 20 billion rubles ($600 million) this year to European buyers under agreements to award retroactive discounts, Chief Accountant Elena Vasilieva said.
Eni SpA (ENI), Italy’s biggest oil and gas producer, will receive “a lion’s share” of the payments, which totaled 20 billion rubles as of June, Vasilieva, who’s also a deputy chief executive officer, told reporters today in Moscow.
Customers in Europe, Gazprom’s biggest market by revenue, have sought changes to their purchasing contracts with Gazprom after the 2008 recession cut demand, dragging spot prices below the long-term contract levels. Gazprom ties its contracts to prices for crude and refined-oil products with a time lag of as much as nine months.
At the start of the year, Gazprom agreed with a group of European customers including Eni to cut gas prices by about 10 percent. The gas prices for previous years have been lowered, meaning the Moscow-based company needs to make retroactive payments to the clients. The gas producer said it didn’t raise the weight of spot indexation in its multiyear contracts.
Contract talks are taking place now only with EON Ruhrgas, RWE AG (RWE)’s Czech unit and Polskie Gornictwo Naftowe i Gazownictwo SA, known as PGNiG, where decisions are expected soon, Deputy CEO Alexander Medvedev said June 20. The three remain in arbitration with Gazprom over prices and volumes after losing billions of euros buying fuel at above-market rates and selling gas-fired power at a loss.
Medvedev is in “active talks” with partners on the payments, Chief Financial Officer Andrey Kruglov said at the same briefing today. The final amount of the payments will depend on the outcome of the talks, he said.
RWE isn’t yet close to an agreement with Gazprom, Rolf Martin Schmitz, the German utility’s chief operating officer, said yesterday. “Our ideas still don’t coincide,” he said, adding that RWE expects the completion of the talks in 2012 or 2013. “The Russians still aren’t willing to change.”
Gazprom’s revenue forecast of $160 billion for this year already includes funds budgeted for the retroactive payments, Kruglov said. That compares with $158 billion of revenue for last year.
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