Russian gas giant Gazprom does not expect changes to its oil-indexed, long-term gas contract system, CEO Alexei Miller said Thursday.
Gazprom "does not expect and does not plan any changes to the long-term contract system," Miller said at the general shareholder meeting in Moscow.
"We have demonstrated firmness in the talks with our clients and our sales earnings rose to $43.9 billion in 2010 from $42.5 billion in 2009," he said.
The gap between long-term, oil-indexed gas contracts and spot market prices at trading hubs remains a source of tension, even though it has shrunk from highs during the peak of the global financial crisis.
Many European gas buyers have been pushing Russian gas giant Gazprom to alter its long-term contracts to reflect the gap between spot and oil-linked prices. In some cases, Gazprom has agreed to alter contracts for a three-year period to include a ratio of up to 15% spot prices and 85% oil-indexed prices.
But Gazprom has refused to fundamentally alter the contracts, which in some cases stretch beyond 2030, arguing long-term contracts provide a more predictable and stable product with greater flexibility on volumes.
In April, Germany's dominant gas importer, E.ON Ruhrgas, said it would not enter arbitration with Gazprom as planned and that it had decided instead to continue to work on reducing the oil price element in its long-term contracts with the Russian supplier through negotiation.
The German company had said that it was still in talks with Gazprom "to adapt the long-term supply contracts to the current market situation."
EUROPEAN DEMAND RECOVERY
European demand has been recovering faster than initially expected, Miller said, with exports in the first half of 2011 up by 26.6 Bcm from the same period last year, representing a 26% increase.
"We already see that in this year we'll export from 155 to 158 Bcm of gas to Europe and Turkey and deliver a new record in non-ruble sales," Miller said, noting that 2010 volumes had also grown significantly over 2009 levels.
"The total volume of gas sold to end users in the UK, France, the Czech Republic and Italy in 2010 was 4.7 Bcm, 47% higher than in 2009," Miller said.
Within Europe, Gazprom's market share was 23% as of the end of 2010, compared to a 19% share for Norway, 10% for Algeria and 6% for Qatar, Miller said.
Gazprom plans to increase export volumes by at least 50% by developing new major markets in the coming decade, Miller said.
Gazprom has been in negotiations with China to provide up to 68 Bcm of gas since 2006, but the two parties have been unable to agree on a price for the supplies.
