MOSCOW: Russian gas exporting monopoly Gazprom is close to wrapping up protracted pricing talks with top European clients and is sticking to its export plans, deputy head Alexander Medvedev said.
Medvedev also admitted for the first time that the giant Shtokman project to extract gas from the bed of Barents Sea has been delayed as partners have failed to agree on investments.
He said talks with Gazprom’s biggest European customer, Germany’s E.ON Ruhrgas, as well as with RWE and Polish gas monopoly PGNiG could be finished soon.
Gazprom wants to keep as many contractual volumes as possible linked to oil prices, maintaining a 40-year old practice, but European customers have demanded the Russian exporter increase the cheaper spot pricing element in long-term contracts.
The Russian exporter agreed to cut some slack for several European companies, but the negotiations are still under way with E.ON, which is struggling with a weak gas business and is seeking arbitration in a prolonged row with Gazprom over long-term contract terms.
“We have finished talks with everyone but three companies. This is including E.ON Ruhrgas, with which we are close to finishing talks outside of an arbitration court,” Medvedev said.
“With RWE, I guess, a result is not far away ... We also met new leadership of PGNiG company. We instructed the experts together to complete the negotiation process before the end of the European soccer championship,” Medvedev said.
The final of the Euro 2012 soccer tournament, which is being hosted by Poland and Ukraine, will be played on July 1.
A spokesperson for E.ON declined to comment.
A spokesman for RWE said, “We have taken note of what Medvedev said. We do not comment on that. We still believe that we will have solved all outstanding gas treaties in 2012/13.”
“We’re in arbitation, which does not exclude us from having (commercial) discussions. But we will not comment on statements by Mr. Medvedev,” said PGNiG spokeswoman Joanna Zakrzewska
Gazprom held a 27 percent share of the European Union gas market last year, selling 150 billion cubic meters of gas to the EU.
Medvedev reiterated that gas exports to Europe were likely to be flat by volume this year as energy demand flags amid the euro zone crisis, but revenues were likely to be higher at $ 61 billion, up from $ 57 billion last year.
Gazprom’s total gas exports are expected to reach a record high of 222 bcm this year.
Medvedev also said that he did not expect any problems with Greece over payment for its gas imports from Russia.
A source at Greek gas firm DEPA said the state-owned company had secured 100 million euros ($ 126.8 million) in bank loans to pay for deliveries until the end of August.
The Gazprom official in charge of exports also said the Shtokman gas project would not meet its promised schedule.
Gazprom has a controlling stake of 51 percent in Shtokman, which has reserves of almost 4 trillion cubic meters. Norway’s Statoil owns 24 percent and Total 25 percent.
The project has long been delayed as the partners have not been able to agree on financing and the configuration of the venture.
It had been planned that Shtokman will pump pipeline gas in 2016 and start liquefied natural gas (LNG) production in 2017.
“The March board meeting (of the Shtokman partners) decided to delay the deadline to July 1. We’re working with that as our target and have no comments on the ongoing talks,” Statoil spokesman Baard Glad Pedersen said.
