Gazprom is being forced to sign revised gas price deals with European consumers. Following a meeting of Gazprom Deputy Chairman Alexander Medvedev with PGNiG President Grazyna Piotrowska-Oliwa in Warsaw, the Russian gas monopoly said it found a mutually acceptable mechanism on price for natural gas with Poland's state-controlled gas company. The price adjustment concerns gas supplies to Poland delivered through the Yamal-Europe gas pipeline. "This is an important step to restoring the competitiveness of PGNiG's long-term contracts," Medvedev said on 6 November.
Konstantin Simonov, head of Russia's National Energy Security Fund (NESF) in Moscow, told New Europe on 9 November Gazprom has very difficult relations with some consumers. But he reminded that a range of European consumers have received price cuts from Gazprom since 2010. In February 2012, Medvedev said Gazprom had reduced its gas prices by an average of 10% in its long-term contracts with GDF Suez, Germany’s Wingas, Slovakia’s SPP and Turkey’s Botas.
Late in October, RWE Transgas, the Czech unit of Germany's RWE, won a court case in Vienna against Gazprom, which was demanding hundreds of millions of euro under take-or-pay clauses.
The European Commission has also launched a formal investigation to determine whether Gazprom has abused its dominant position on the EU market, mostly in former Soviet satellite states in Eastern Europe.
Simonov said the Commission investigation factored in Gazprom’s decision to lower prices for PGNiG, forcing the Russian company to be more flexible with east European countries. “If you are speaking about this case, our relations with Poland, of course I think the decision of European Commission was a serious argument for Gazprom because the Commission blamed Gazprom for dividing the market of west Europe and east Europe,” Simonov said. “First of all Gazprom was tolerant with western countries now maybe the new trend is that Gazprom is more tolerant with east European countries because we also signed a new contract with Bulgaria,” he said. However, he explained that Bulgaria has an important role in Russia’s South Stream gas pipeline project and “that is why it’s possible to say that it was special gift for Bulgaria for the agreement to build South Stream”.
But Gazprom has defended its long-term contracts, the take-or-pay principle and the linking of the price of gas to the price of oil.
Gazprom noted that the revised PGNiG contract does not call into question the “fundamental principles of natural gas trading”.
Russian President Vladimir Putin wants Russia to preserve its share in the European market. “Gazprom must be more flexible in this case. But we see that Gazprom does not want to change this system. That is why it’s still a very serious question what will be the future model of our relations because discounts is a good idea but what will happen with long-term contracts, what will happen with correlation between gas prices and oil prices?” Simonov asked “This is the main question of our relations - not with Poland but with European Commission.”
He said Gazprom wants to avoid a legal battle with the Commission. “For Putin gas business is priority number one. That is why we can give some political benefits for other countries if we want to see our implementation of our gas interests,” Simonov said.
KGeropoulos@NEurope.eu
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