OAO Gazprom, Russia’s natural-gas export monopoly, will revise prices under an accord it plans to sign soon with Germany’s E.ON AG, while maintaining volumes as European demand weakens.
“The price correction will help us sell gas in a competitive way,” Gazprom Deputy Chief Executive Officer Alexander Medvedev told reporters in Moscow today. “Volumes won’t be reduced.”
Customers in Europe, Gazprom’s biggest market by revenue, have sought changes to their purchasing contracts with Gazprom since the 2008 recession caused a fuel surplus, dragging spot prices below long-term contracts. Gazprom ties its contracts to prices for crude and refined-oil products with a time lag of as much as nine months.
Gazprom’s deal with EON is “conceptually the same” as an earlier agreement with Germany’s Wingas GmbH, Medvedev said. The gas producer, the world’s largest, won’t increase the weight of spot pricing in the formula, Medvedev said.
Gazprom agreed earlier this year to cut prices for a number of customers including GDF Suez (GSZ) SA and Wingas, which is a venture between Gazprom and Wintershall AG, and apply a retroactive discount averaging 10 percent. Gazprom plans to stick to this benchmark, Medvedev said on June 20.
Under the already signed agreements, Gazprom will return at least 20 billion rubles ($600 million) to buyers this year, with the lion’s share going to Eni SpA (ENI), Deputy CEO Elena Vasilieva said yesterday.