Turkey joined a chorus of European companies demanding that Gazprom cut its natural gas prices, increasing pressure on the lucrative pricing model that underpins Russia's gas exports. Turkish Energy Minister Taner Yildiz said on Thursday the country might terminate one of its contracts unless it obtains a sufficient price reduction.
"There is a 6 bcm contract on the West pipeline that's about to end. We will terminate the contract if we don't see a sufficient price reduction," he said. Turkey joins a number of customers in seeking price cuts from the world's biggest oil and gas exporter, whose contracts link gas prices to global oil and oil product prices.
Gazprom is also in talks with German utility E.ON, which as well as other European clients is asking the Russian company to cut prices in long-term contracts by including a spot pricing element into deals. Gazprom has agreed to some concessions, but the bulk of its contracts is still tied to oil pricing. Earlier this week the European Commission raided the offices of Gazprom subsidiaries in Europe as part of a probe into suspected breaches of anti-trust policies.
"We believe that the growing pressure on Gazprom is negative from both the market and the fundamental perspective," Russia's state-controlled VTB Capital said in a note. European politicians have viewed Gazprom, which covers a quarter of the European Union's gas needs, as the Kremlin's trump card in its foreign policy.