25 January 2012
A new reality for Gazprom amid low gas demand
Hurting customers and low gas demand, mean Gazprom must accept changes to its contract terms
Gazprom faces a dilemma over its European gas contracts, with its best customers losing billions on oil-linked prices, demand slumping and competitors likely to offer attractive discounted deals. The Russian gas-export monopoly has relented a little on pricing and, in early January, offered discounts to five customers. But this may not be enough for utilities such as Germany’s E.On and RWE, which are desperate to escape loss-making, oil-linked deals. Gazprom’s customers on oil-linked contracts have suffered huge financial losses as a result of the disconnect between oil and spot-gas prices in 2008. This meant European importers buying gas at expensive oil-indexed prices and selling at lower
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