Gas: how to "inflate the price"

New Gas War between Gazprom and Europe

Take it or pay. A new gas war is brewing between Gazprom and Europe. For the first time, its main characters are not neighbors in the CIS, but European energy holdings. The first salvo has already been produced: on December 1, Gazprom refused the German company E.on to revise the terms of the contract for the supply of Russian gas. The reasons for the brewing conflict was versed in The New Times The Industrial Collapse and the falling of demand for energy caused by him painfully hit the largest European energy holdings. According to preliminary data, by the end of the year they may lose about 30% of the profit. In the hope of mitigating the negative consequences of the crisis, European energy turned to their old Gazprom business partner. E.on Ruhrgas asked the Russian concern to reconsider long -term contracts in order to reduce the volume of supplies. The fact is that the minimum volume of Russian gas contracted by the German side for 2009 is 160 billion cubic meters. According to forecasts, the real fence will amount to 150 billion cubic meters - it simply does not need more. But under the terms of the contract and for the unused 10 billion E.on will have to be paid. In the same way, the minimum volumes of the contracted Russian gas, the Italian ENI, Turkish Botas and some other European partners of Gazprom are also underway. However, despite the requests of the Europeans, the Russian gas monopoly did not want to make concessions: after all, the total size of the failures that can be obtained for non -assembled gas are estimated at billions of dollars.

Excessive appetite , but the reason for the conflict that goes so far under the carpet is by no means in a fall in demand. One of the main ones - the unbridled price appetites of Gazprom, is recognized

The President of the European Union of Gas Industry (Eurogas) Domenico Dispenser . The situation reaches the point of absurdity: the cost of gas in the spot market1 today is already 45% lower than the price at which Gazprom sells its fuel. Over the next three years, this gap will increase by another 25%, I am sure

Member of the Board of the German E.on Ruhrgas Johan Weze. Gazprom ignores changes in the market situation, referring to long -term contracts concluded with European partners for 25-30 years. As a result, the export of Russian gas to Europe has already decreased by 7%. Next year, the situation will only aggravate. According to Gazprom, export prices for European consumers in 2010 can increase by another $ 20-30 per thousand cubic meters (now they are about $ 280 per thousand cubic meters). “Over the past few months, the average cost of a basket of petroleum products has increased, on the basis of which Gazprom calculates the forecast of gas prices for European consumers,” explains

Analyst IR Arbat Capital Vitaly Gromadin. The fact is that the cost of fuel supplied under long -term contracts is calculated on the basis of prices for alternative energy sources (fuel oil, gas, etc.). The cost of the "basket of oil products" is closely linked to oil prices, while in the spoke market, black gold prices have a lower effect. In the open market, the ball is ruled by demand and supply. “Due to the strong oversaturation, today's exporting gas market is the buyer’s market, not the seller. The reason is not only in the fall of demand, but also in many new projects for the production of liquefied natural gas (LNG), as well as in the emergence of new technologies that have reduced the cost of gas gas production (shale GAS). In such conditions, it is more profitable for European customers of Gazprom to buy gas in the spot market, where its cost is much lower than supplies under long -term contracts, ”says Gromadin.

Excessively high prices of Gazprom are not only the result of their binding to the "oil basket", believes

Mikhail Delyagin, Scientific Director of the Institute of Problems of Globalization . According to him, at the expense of them, the monopolist covers the extreme inefficiency and bulkiness of his structure and a huge share of non -core expenses. The expert’s words are confirmed by numbers: over 9 months of this year, Gazprom’s income decreased by 408 billion rubles (up to 3.3 trillion), and the profit from gas sales fell 1.7 times (432 billion versus 716 billion). The obvious hole in the budget makes the negotiation positions of the Russian gas monopolist in confrontation with its European partners are very vulnerable.

The bet on liquefied gas is clearly demonstrated by the fact that Europe is not going to continue to endure the price dictatorship of Gazprom and therefore is increasingly focusing on possible alternatives to gas supplies from Russia. According to

Denis Demin, an expert of Energy Capital , the rate is placed primarily on liquefied natural gas, which does not go through pipes, but is delivered to the old light with tankers.

Today in the world market liquefied gas costs 2-2.5 times cheaper than Gazpromovsky: it is profitable to buy, even despite transport costs. It is no coincidence that, according to the estimates of the International Energy Agency, in France, in the total volume of gas consumed, 30% are already in liquefied gas, and in Spain - even 70%.

According to preliminary estimates, for this year, the import of liquefied gas to Europe from Africa and Latin America increased by 7-8%. According to

Expert of the International Energy Agency, Iana Kronshw , imported liquefied gas - the embodiment of the dream of the Old World about the liberalization of the blue fuel market, since there are many suppliers: Algeria, Qatar, Trinidad and Tobago, Egypt ...

“Europe successfully conducts the process of diversification of energy sources, increasing the supply of LNG, especially from Qatar and Algeria,” says

Expert of the Council on Foreign Policy of Germany, Alexander RAR . “And because of Gazprom’s reluctance, this process can accelerate this process.” The fact that this is not an empty threat is evidenced by the data of the International Energy Agency. “Europe is already importing 50 billion cubic meters of liquefied gas, and in the near future, thanks to the opening of new terminals, it will be able to increase this figure to 90 billion,” says Ian Kronshw.

* * The spare market involves transactions with immediate delivery of goods at current prices.

Double standards , however, cannot completely abandon Russian gas in favor of more profitable proposals by European companies: in all Gazprom agreements, the principle of “Take or Pay” is fixed, according to which the buyer is obliged to pay the contracted volumes, regardless of how much fuel was consumed in fact. The company complies with this condition implicitly: in case of violation, the buyer faces a fine that is many times higher than the cost of the unbearable gas.

As explained by The New Times

A source in Gazprom, European partners suggested abandoning the principle of "bay or pay." “Reducing demand in the market, in our opinion, is not a sufficient reason for revising agreements. I do not think that any concessions are possible here. For us, this is the basic principle on which all long -term contracts and the entire export policy of Gazprom are built, the source said. “The principle of“ take or pay ”is not at all the invention of Gazprom,” I agree with this position

Leonid Grigoryev, President of the Institute of Energy and Finance . “It was introduced in the 80s at the mutual desire of the parties to guarantee both gas supply, on the one hand, and its payment on the other.” As experts explain, following this principle in certain periods of time may be unprofitable to the seller, to others (as now) - to the buyer, but in general he is insured by the risks of all participants in the transaction. At the same time, Gazprom itself uses the principle of “take or pay” quite selectively. Recently, he made an exception for Ukraine, agreeing to a change in the conditions of gas agreements with Naftogaz: penalties for shortage of gas this year will not be applied to Kyiv. These concessions cost the Russian monopoly about $ 5 billion.

In relation to European companies, Gazprom is not yet inclined to show such generosity.

Sergey Chernavsky, head of the Laboratory of Economic Problems of the Central Energy Energy, Tsemi RAS , considers this position a short -sighted one: Gazprom can lead itself tough and insist on receiving money this year. But in the future, this will make Europeans carefully approach the choice of partners and make more efforts to liberalize their market. ” According to the expert, any conflicts will only accelerate the already active process of diversification of export routes to Europe. So, after a few years, Gazprom may begin to fix a steady decrease in its own share in the European gas market, which the company has devoted to the conquest of nearly 40 years.