RWE Renegotiating Gazprom Contract to Seek Market-Based Solution

RWE Supply & Trading is “in the middle of price renegotiations” with OAO Gazprom (GAZP), Andree Stracke, the head of global gas and LNG origination at the German utilities unit, says in interview in Vienna.

On long-term contracts:

“All our other contracts are market-adjusted except the contract with Gazprom. It needs to be a structural solution, which is market-based.”

“We live in a very competitive environment and not many of our customers are interested in long-term purchase contracts. If we have some long-term contracts, they should be paid against market pricing because that’s our competitive market. As soon as customers, governments, regulators, whoever, would pay for security of supply, then the value of the long-term contract would increase.”

On potential for coal indexation in contracts:

“Today it is the only viable solution. Coal indexation could make it viable to run gas-fired power plants but the problem is which producer will accept coal pricing in LNG. But that could be an opportunity.”

To contact the reporter on this story: Anna Shiryaevskaya in London at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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