DUESSELDORF/MOSCOW: Direct talks between Germany’s RWE and Russia’s Gazprom on an out-of-court settlement in a dispute over gas price contracts have failed, two people familiar with the matter told Reuters.
Supply contracts are vital for European utilities, which buy gas from Gazprom or Norway’s Statoil under long-term deals linked to oil prices while having to sell it to customers at lower retail prices linked to the freely traded spot market.
Last year, Gazprom gave in to customer pressure and offered RWE’s peer E.ON a price cut on its long-term gas supplies, giving it a 1 billion euro ($ 1.3 billion) boost to its half-year results.
A spokesman for Gazprom said yesterday the dispute with RWE would have to be decided by an arbitration court in Vienna, adding a ruling could be announced “in the next few days or in 2-3 weeks”.
The court of arbitration in Vienna declined to comment.
RWE, which had said it aimed for an agreement with Gazprom in mid-2013, also declined to comment.
John Musk, analyst at RBC Capital Markets, said he expected a payment settlement of about 300 million euros.
RWE, Germany’s No.2 utility, has come under pressure after Germany’s decision to exit nuclear power for good by 2022, tepid demand for energy in core market Europe, as well as the rise of renewables that has edged out energy of its conventional power plant fleet.
RWE, Gazprom gas talks fail
