Gazprom agrees in practice to cut sharply prices for overseas customers, and now it’s turn of Azerbaijan and other suppliers
Baku, Fineko/abc.az. Two statements that can change the situation in the being formed global gas market were made yesterday.
Azerbaijani President Ilham Aliyev stated that the country has almost completed development of its own gas strategy oriented to export this fuel. In parallel, Alexander Medvedev, deputy chairman of board of Russia’s Gazprom, has stated of monopoly’s readiness to review the formula on which its gas prices are formed.
The President of Azerbaijan did not yet disclose the parameters of the future gas strategy. Medvedev was a little more candid with the promise of revision of the “contract pricing".
"The novelty is that we can choose not exhaustible but renewable resource as alternative energy resource for fixing prices in the future," Medvedev said.
De facto, in its "contract pricing” formula Gazprom is ready to replace oil and petroleum products with by renewable energy sources, while keeping the binding of gas prices to the cost of the energy sources replaced by "blue fuel". Medvedev did not say more, and immediately received a barrage of criticism that the new formula does not expand the spot component in the pricing. De jure, it is so and de facto it is not so.
Both Russia and Azerbaijan, as a future "alternative" supplier of gas to Europe, just cannot ignore the formation of a single global gas market. The American, Asian and European gas markets are being integrating, and the gas becomes a normal stock commodity such as oil. As a result, according to Societe Generale, already in 2012 gas supplies bound to the spot quotes can for the first time exceed the amount of fuel supplied on long-term contracts with oil binding (in 2011 the share of supply on spot was about 45%).
In case of such trends keep by 2015-2017, when Gazprom will launch its South Stream, and Azerbaijan will start supplying gas to Europe via Turkey, the spot will become the primary method for determining the price of gas. Both Azerbaijan in its strategy and Gazprom in its practice must take this into account. At that, already today Gazprom is obliged to start changing its "contract pricing", and it has already begun trading with its European counterparts. Last week, President Putin stated in Germany that Russia would be upset if gas prices fall, but survive it.
Yesterday, Alexander Medvedev (do not confuse with number two of Russias "tandem") actually marked the horizon of concessions that Gazprom is ready to make for its customers. De facto, he only said that the monopoly recognizes gas market as the "buyer market" (such is now the renewable energy) and will claim for the "minimum guaranteed price", which now exists in the alternative energy contracts. The same idea was offered to its new buyers of gas - friends from China, where the Russian president was visiting yesterday.
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