Gazprom Refunds Uniper for Gas Bills

Russian gas giant Gazprom has agreed to pay out a €380mn gas contract rebate to major customer Uniper, the subsidiary of German utility E.ON, the latter company said March 29. The agreement, which was reached sooner than E.ON expected, further reduces the effect of oil prices on long-term gas contracts and resolves a pending arbitration proceeding between the companies.

The agreement will enable E.ON to release some of the provisions recorded in prior years, resulting in a non-recurring positive Ebitda effect of about €380mn in the first quarter of 2016. The release of the remaining provisions, made in several years, will result in cash outflow of €800mn, probably in the second quarter, E.ON said.

The non-recurring positive effect serves to increase E.ON’s forecast range for its 2016 Ebitda from between €6.0bn and €6.5bn to between €6.4bn and €6.9bn, it said.

“Gazprom and Uniper have again demonstrated that long-term gas supply contracts are amenable to flexible solutions,” Uniper CEO Klaus Schafer said. “Even in a difficult market environment characterised by significant declines in energy prices, our partnership has proved itself again. Long-term gas supply contracts will remain a mainstay of a stable supply of heat and electricity for Europe.”

"With this agreement the prices are adjusted on the basis of our current market conditions. Uniper has thereby derisked its long-term gas supply contracts for the upcoming years," E.ON said. There was no specific reference in the statement to hub price or to reduced take-or-pay obligations but Schafer has been an outspoken opponent of oil indexation, and so far the renegotiations of long-term contracts in Europe have reduced the weighting of oil prices, despite the fall in the price of oil.

E.ON is due to split from Uniper if the shareholders vote for that in June, in the process losing the trading, production and supply operations. 

William Powell