Greek gas company DEPA has secured cheaper supplies of gas from Russian exporter Gazprom after a successful renegotiations of its long-term supply deal in July that also includes a cut in delivered volumes, a company official said. "Gazprom and DEPA have adjusted volumes and prices in line with developments in the Greek market and similar arrangements with other long-term European buyers," DEPA's head of gas supply Leonidas Dragatakis told Reuters in a telephone interview.
He said the new long-term price with Gazprom was "satisfactory". Gazprom has been supplying Greece with up to 3 billion cubic metres a year of gas under an earlier agreement. Dragatakis declined to give precise figures for the new prices and quantities.
Gazprom ties long-term sales of gas to rising oil prices and sets minimum import requirements that customers must take or pay for even if they do not need it. A wide oil-to-gas price spread means that the Russian pipeline gas export monopoly's European customers are losing billions of dollars each year as they are forced to sell the gas at a discount to the price they pay.
Utility E.ON Ruhrgas, Germany's biggest importer of Russian gas, in August said it was pursuing arbitration with Gazprom in a prolonged row over gas prices. It wants to eliminate the influence oil prices have on its gas supplies after struggling to stem losses from its long-term contracts. Peers like RWE, Italy's Eni and France's GDF Suez are all in talks to bring gas supplies from the suppliers like Russia and Norway more in line with spot prices at European hubs.
Having won reduced rates from Gazprom, the state-owned Greek company wants to pay less for its long-term supplies of liquefied natural gas (LNG) from Algerian state owned company Sonatrach. "DEPA seeks adjustments that will allow gas under our long term contract (LTCs) with Sonatrach to be competitive compared to other LTCs and relevant supplies in the Greek market," Dragatakis said.
He said LNG imports account for about one third of Greece's gas market, more than half of which have been purchased from the spot market. DEPA's share of the gas market fell from 100 percent to 88 percent last year as power producer PPC started importing cheaper spot LNG cargoes. "Sonatrach is well aware of our concerns," Dragatakis said, referring to the mismatch between long-term LNG and domestic gas prices. Algeria's Sonatrach sends between 12 and 16 cargoes of 70,000 cubic metres each to DEPA annually.