E.ON, Gazprom gas contract talks break down

FRANKFURT : Talks between E.ON and Gazprom aimed at changing E.ON Ruhrgas's contract purchases have broken down for now,

Published July 2, 2011 Updated July 2, 2011 03:18pm

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By Muhammad Iqbal

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Gazprom wants to keep as many contractual volumes as possible linked to oil prices, maintaining a 40-year old practice, but in view of cheaper spot-market prices in Europe customers such as Germany's E.ON have been paying dearly for more than two years.

E.ON, whose Ruhrgas unit is Russian Gazprom's biggest European customer, had said in March contract price discussions with suppliers must satisfy all sides.

Die Welt cited negotiation sources as saying that the deadline for talks could now be pushed back far into July. Spokesmen for both E.ON and Gazprom declined to comment on the report.

E.ON Chief Executive Johannes Teyssen has previously denied that Ruhrgas had been asking for all contracts to be based on spot-market gas prices.

"The solution would not be so trivial that we would have proposed that," he then said.

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