Statoil Sees Share of Spot Price-Indexed Gas Contracts Growing

Statoil ASA, Norway’s largest energy producer, expects the share of natural-gas sales contracts linked to spot prices to exceed 75 percent of the total by 2015 from 55 percent.

“Europe has decided to develop the liquidity of its gas market,” Eldar Saetre, Statoil’s executive vice president of marketing, processing and renewable energy, said today in an interview in London. “It’s important for us to adjust to this in an opportunistic way and create possibilities and not be pushed into it.”

Exporters came under pressure from consumers to revise contracts that link gas and oil after the gap between the two fuels widened. Suppliers to Europe including OAO Gazprom, Russia’s natural gas export monopoly, and Statoil have increased the amount of spot pricing in their deals after customers renegotiated contracts.

In November, Statoil agreed with BASF SE’s Wintershall to supply an amount equal to about 6 percent of Germany’s annual natural gas demand over the next 10 years in the Norwegian producer’s biggest contract based on spot prices.

“New sales in markets that are fully liberalized are overwhelmingly gas-based contracts,” Saetre said. The Wintershall contract “represents that type of contract and also a new type of customer that we haven’t had before.”

The increase in gas traded on exchanges and over the counter underlines attempts by Europe’s biggest utilities to end a pricing system that has led to losses as oil has climbed.

Statoil will have “more than 10 percent of continued oil indexation, but I don’t think that we’ll have more than 25 percent,” according to Saetre.

The executive predicted that gas prices in Europe would “stay strong” in the medium and long term.

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