Bloomberg News

Gazprom Seeks German Gas Dispute Resolution as Price Gap Narrows

November 09, 2011

Nov. 8 (Bloomberg) -- OAO Gazprom, Russia’s gas export monopoly, said it may find a solution to its a dispute with German customers seeking to lower fuel prices as the gap between its long-term contracts and European forwards narrow.

Some of Gazprom’s contracts are at about $500 per 1,000 cubic meters while forward prices have climbed to more than $400, Deputy Chief Executive Officer Alexander Medvedev said today in the northern German town of Lubmin, in comments confirmed by his spokesman.

“This fact is a good basis to find a solution with our German friends,” Medvedev said.

The gap between Gazprom’s long-term contracts, which are linked to a basket of oil and products, and forward prices widened as the global economy slumped in 2009.

Gazprom, which supplies 25 percent of Europe’s gas, has been defending its long-term gas-supply contracts from mounting pressure. Polskie Gornictwo Naftowe i Gazownictwo SA, known as PGNiG, said yesterday it is applying for arbitration to get Gazprom to change prices, following RWE AG’s Czech unit and EON AG. European Union regulators raided the Moscow-based gas producer’s central and eastern European trading units and customers at the end of September looking for possible antitrust violations.

Gazprom has forecast its gas price under long-term contracts in Europe will average $400 a 1,000 cubic meters this year, compared with $306 last year. The price may reach $500 in the fourth quarter, Chief Executive Officer Alexei Miller said in April.

--Editors: Torrey Clark, Amanda Jordan

To contact the reporters on this story: Patrick Donahue in Lubmin at pdonahue1@bloomberg.net; Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; James Hertling at jhertling@bloomberg.net


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