Gazprom launches its first European spot gas auction

Gazprom Deputy Chairman Alexander Medvedev

Gazprom Deputy Chairman Alexander Medvedev

 Gazprom yesterday launched its first ever public auction for spot gas supplies in Europe over the winter, in a move that Western analysts are calling a concession in its long-running battle with Brussels over the future structure of the European gas market.
The EU has been contesting Russia’s strategy of requiring its European customers to sign long-term contracts linked to oil prices for the best part of ten years, mainly because it claims that this has forced member states in central and eastern Europe to pay above the market rate.
The 3.2bn m³ involved in the four auctions to be held this week only represents about 2% of Gazprom’s annual sales to Europe, but analysts believe that they indicate that Gazprom is giving ground in the face of the antitrust suit bought against it by Brussels earlier in the year. Gazprom is due to respond to the commission’s antitrust charges by the end of this month, but executives at the Russian company have expressed hope that they will be able to reach a settlement.
Gazprom Deputy Chairman Alexander Medvedev, however, yesterday claimed that the move was merely a response to the evolution of the market, said. “The European gas market changes constantly and ….we want to test the new form of trading the gas and see what benefits it can bring to seller and buyers,” he said. Gazprom may hold additional auctions in the future, he added.

 

Source: FT