OMV in 'intensive' talks with Gazprom, Statoil over gas price revision
London (Platts)--13Aug2013/712 am EDT/1112 GMT
Austria's OMV said Tuesday it is in "intensive" negotiations with its two major natural gas suppliers -- Russia's Gazprom and Norway's Statoil -- over possible price adjustments to its long-term gas import contracts.
OMV's second-quarter result was impacted by the "burden" of oil-linked gas supply contracts, and the company is now focused on righting the skewed elements of the contracts that mean it pays a higher price for its long-term contracted gas than the current spot price.
"We are in intensive negotiations with both of them and we are defending our claims of course," OMV's gas and power chief Hans-Peter Floren said during a webcast Vienna press conference following OMV's Q2 results.
"This year we are entitled to adapt the prices and we have claimed what there is to be claimed," Floren said.
Article continues below...
Platts 7th Annual European Gas Summit (EGS)
September 19-20, Vienna, Austria
EGS 2013 will once again provide a platform for the region's leading gas companies, TSOs, regulatory bodies, industry associations, traders and analysts to meet to discuss and debate the future of an industry experiencing monumental change and facing huge challenges.
Within its long-term contracts are clauses that allow for renegotiation at certain times over the duration of its term.
The deadline in its contract with Gazprom was April 1 this year, while the deadline for its Statoil contract is October 1, 2013.
Asked when there could be an outcome to the talks with the two companies, Floren said: "We are in intensive discussions, but I can't comment on the timeframe. We are respecting confidentiality."
In recent years many of Gazprom's European customers have pushed to renegotiate long-term, oil-indexed gas supply contracts, claiming that there is a disparity between prices on bullish oil markets and spot prices for gas, which have been affected by weak demand, increased supply and competition from coal.
Gazprom has resolved these claims through private contract talks rather than arbitration, though Germany's RWE took its claims to an arbitration court and won a landmark case in June this year.
Under the case, Gazprom was forced to return cash to RWE and revise the long-term contract price of gas supplies to the Czech Republic.
In 2012, Gazprom recognized retroactive payments of more than $3 billion to some of its main European clients after reviewing pricing conditions, including for OMV.
Others included Italy's Eni and EGL, Germany's E.ON Ruhrgas, Shell, Poland's PGNiG and Denmark's DONG.
--Stuart Elliott, email@example.com
--Edited by Alisdair Bowles, firstname.lastname@example.org