Czech Rep: Court Ruling Plays in Net4Gas Divestiture

The sale of RWE AG’s Czech natural gas pipeline division has been delayed.

RWE is reported to be pushing back the November bidding deadline for NET4GAS, as a result of a recent court ruling in which RWE Transgas, the Czech unit of Germany energy company, received a favorable ruling over Gazprom over "take-or-pay" agreements.

In October, the Austrian Federal Economic Chamber's International Arbitral Center in Vienna held that RWE Transgas is entitled to reduce its uptake of gas under existing take-or-pay commitments within the confines of long-term gas supply contracts with Gazprom Export, which are tied to oil prices.

Gazprom's existing gas supply contract with RWE Transgas expires in 2035. Under the contract RWE Transgas gets 9 billion cubic meters (bcm) of gas with the minimum annual contracted amount (take-or-pay) at 90%. Gazprom plans to appeal the ruling.

Interest parties for the NET4GAS assets reportedly includes Czech utility Energeticky a Prumyslovy Holding AS, Macquarie Group Ltd, Allianz SE with Borealis Infrastructure, private equity company KKCG Group, and Poland’s Gaz-System SA.

Hampered by the German government decision to exit nuclear power by 2022, the sale of NET4GAS, the operator of about 2,500 kilometers of gas pipelines is part of RWE’s disposal plans aimed at raising as much as 7 billion Euros by the end of 2013.