Gazprom Reported to be Planning Price Cut

Observers believe Russian gas monopoly Gazprom is gearing up to cut long-term contract prices in 2013.

Reuters reports a company source revealing that the revised prices will compare favourably with the spot market. An anticipated 10% reduction will apply.

Under this scenario the $400 (€301) charged per thousand cubic metres of gas would go down to $370 (€278).

Gazprom, Europe’s biggest supplier of gas, has come under increasing pressure from rival suppliers such as Norway’s Statoil, which unlike Russia adapted its pricing policies early on to reflect customer demands for cheaper gas.

A near 10% drop in Russian gas exports to Europe over the January-November period, versus the prior year, underscores the extent to which Gazprom is losing its main export market, Thierry Bros, analyst at French bank Societe Generale, told the newsagency.

The Gazprom source said gas exports to Europe are expected to increase to 152 billion cubic metres (bcm) next year from just over 140 bcm in 2012, which came in below forecasts due to sluggish demand.

Europe's gas demand has recently slipped because of the euro zone recession, energy efficiency drives and competing fuels in the main market, Germany.

See also: Gazprom Goes On the Offensive