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Gazprom Revaluates Europe
// International Cooperation
Sergey Kupriyanov, the spokesman for Gazprom’s CEO, told Kommersant on Monday the average gas export price for European countries will go up to $250 per 1,000 cu. meters. It seems a hard task, though, to get Europe around to the new price, judging from the latest developments. Both EU members and candidate countries oppose the gas price hike.
Mr. Kupriyanov would not name natural gas prices for each buying country saying it is a trade secret. According to Associated Press, Latvia is currently paying between $120 and $140 for 1,000 cu. meters of Russia’s gas, Lithuania has to spend $151 and Estonia gives $100 per 1,000 cu. meters, under their deals with Gazprom. Poland buys gas from Gazprom at $200-250 while Romania has to pay $230. Finland’s gas authorities decline to reveal terms of their contract with Gazprom too but say that the gas prices comes to at least $200 per 1,000 cu. meters.
There is hardly any European counteragent of Gazprom and its subsidiaries who welcome the review of acting gas supply contracts. Bulgaria, whose fuel needs Russia provides almost in full, is among opponents of the price hike for Russian gas. The state-run Bulgargaz company sent a letter to Gazexport turning down a proposal to review the ten-year contract on the gas transit in the country which is bartered for gas. This contract, which is valid up to 2008, stipulates for Bulgaria to buy the most part of Russian gas at $83 per 1,000 cu. meters, while it has to buy the remaining part from Gazprom at $258/ths cu. meters. The transit contract helps to keep domestic gas prices at quite a low level. These low prices won’t be preserved if the Russian party pays Bulgaria for the transit in cash, as Gazexport proposed. However, Bulgarian Energy Minister Rumen Ovcharov stated on January 6 that “the suggested changes in the gas transit contract are unacceptable for Bulgaria”.
Turkey is also displeased about the price rise for Russian gas as Gazprom covers 65 percent of its gas needs. The country may go to a court of the international arbitration if the parties fail to agree on the price drop for Russia’s gas, Reuters quoted the spokesman for the Turkish Energy Ministry as saying. The talks have started last year but have bore no results so far. Botas, the Turkish state-owned company, insists that the price for Russian gas, which will amount to $273 per 1,000 cu. meters, is too high.
Moldova that buys Russia’s gas at $80 can’t possibly agree to the rise to $160 demanded by Gazprom. Moldovan President Vladimir Voronin said that “$160 is not a market price for Moldova where the joint Moldovan-Russian venture, Moldovagaz, operates and where the joint gas business enjoys a number of privileges”. Moldova “is able to settle accounts with Gazprom at market prices but they ought to be well-grounded, not set at random”, the Moldovan president underlined. The contract between Moldovagaz and Gazprom on gas supplies to the country has not been sealed yet despite negotiations in Moscow. The main reason for this is “the disagreement on the price of gas”, according to Gennady Abashkin, the chairman of the board at Moldovagaz.
Some states of the European Union, which imports from Russia 25 percent of gas, are set to seek an alternative for the Russian supply. Hungarian Minister Janos Koka said on January 4 that Hungary (which receive from Russia 70 percent of all gas it needs) and its EU partners are going to look for ways to reduce the dependence on the Russian gas. Possible solutions are the Nabucco project (gas shipments from the Middle East and Central Asia via Turkey and Austria) and the joint project with Croatia, Slovenia, Austria and Slovakia constructing the pipeline to transport liquid natural gas from the Middle East or Northern Africa.
Germany, the major buyer of Russian gas, still keeps silence, though. Wintershall and E.ON Ruhrgas, Gazprom’s German counteragents, do not disclose terms of their future contracts. Probably, it is due to their involvement in the project on the construction of the North European Gas Pipeline which is to deliver Russian gas directly to Germany through the bottom of the Baltic Sea bypassing any transit countries.
Natalya Skorlygina
All the Article in Russian as of Jan. 10, 2006
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