Gazprom this year will reduce the sales price of natural gas to Europe by 7-10%. Medvedev, Deputy Chief Executive Officer of Gazprom, said the average price for Europe in long-term contracts will be reduced to 370 to 380 dollars per 1,000 cubic meters from $ 402 in 2012, a reduction that aims at boosting Gazprom’s revenues.
The proposed price for Europe translates into a decline of 14.8 dollars per million BTU 13.7 dol. / Mn. Btu.
European buyers including EON SE and Eni SpA (ENI) have been pressuring the state-controlled exporter for discounts since its average gas price reached a record in 2008 while a recession cut demand for the fuel and made gas available at reduced market prices. Gazprom, which supplies about a quarter of Europe’s gas, sells the fuel under multi-year contracts linked to crude and oil-product prices with a time lag of six to nine months. Brent has fallen about 8 percent this year.
“The two factors are playing a role,” Medvedev said. “Retroactive payments for ongoing talks won’t exceed about $800 million to $900 million,” excluding any discounts for Germany’s RWE AG (RWE), he said.
The Russian gas exporter expects to conclude the current round of talks on price revisions with most of its “key partners” by the end of June, Medvedev said. The majority of its contracts will be renegotiated via talks, he said.