November 8, 2011 / 2:57 PM / 8 years ago

UPDATE 2-Gazprom hints of compromise in gas delivery row

* Gazprom could give additional 5 pct on spot indexation

* Move comes as traded gas market tightens

* Statoil could come under pressure (Adds Gazprom Export official on average prices in November)

By Melissa Akin and Henning Gloystein

MOSCOW/LONDON, Nov 8 (Reuters) - Russian gas monopoly Gazprom appeared to offer a compromise on Tuesday in a dispute with European customers who are seeking relief from high contract gas prices.

A $100 gap between the forward price of gas in Europe and the current price of some Russian contract gas points to a possible deal with German consumers, Gazprom Export Chief Executive Alexander Medvedev said following the launch of the first phase of the Nord Stream pipeline.

Russian news agency Interfax quoted Medvedev as saying gas cost $500 per thousand cubic metres under some contracts this quarter while forward prices were now at around $400.

“This is a good basis for finding a good resolution with our German friends,” Medvedev was quoted as saying.

On average, European customers are paying $446 per thousand cubic metres in November, up from $429 in October, not far out of line with spot levels, a Gazprom Export official said by telephone.

Analysts said this was the first sign of a compromise in the ongoing row between Gazprom and European gas supply companies that buy from Russia.

“Gazprom will probably give an additional level of spot indexation of less than 5 percent. This will be on top of the 15 percent spot indexation it has already given to German and French utilities and the 10 percent is has given to Italian utilities ENI and Edison,” said Thierry Bros, a gas analyst at Societe Generale.

European gas prices for year-ahead delivery have risen nearly 40 percent since the beginning of 2010 as oil prices have remained high despite sluggish economic growth, buoyed by war in Libya and the nuclear disaster at Fukushima in March.

Gazprom has so far rejected renegotiation of its long-term deals, and Medvedev said in September, “Gazprom should not cover the mistakes in marketing and trading of our counterparties.”

Many European gas supply companies are suffering from long-term gas deals with suppliers such as Gazprom or Statoil , which link their import rates to oil prices, while supply firms are forced to sell gas to customers at lower retail prices linked to the freely traded spot market.

“We stand by our long-term gas contracts ... but they must be put on a new basis regarding the price arrangements and must adequately reflect the strongly changed market conditions,” said Hans-Peter Floren, board member at E.ON Ruhrgas (EONGn.DE) and at the E.ON group’s trading unit.

“It is about lower prices that reflect the current market levels and another kind of price fixing and more dynamism, which reflects the reality of today’s market with more intense competition and gas prices being established at trading hubs.”

Ruhrgas sought arbitration last August in its row with Gazprom over long-term gas supply contract terms.

On Monday, Polish gas monopoly PGNiG filed an arbitration procedure against Gazprom to cut import prices under a long-term supply deal.

Socgen’s Thierry Bros said that a compromise between Gazprom and European customers would put pressure on Norway’s Statoil.

“The focus will shift to Statoil, whose contracts are up for renegotiation from October 2012,” he said.

Statoil approved a blanket discount to its European clients of a 25 percent indexation to spot markets during initial renegotiations, according to Bros. (Writing by Melissa Akin in Moscow, and Henning Gloystein in London; additional reporting by Vera Eckert in Frankfurt, Oleg Vukmanovic in London and Denis Pinchuk in Moscow; editing by Jane Baird)

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