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. Last Updated: 07/27/2016

Deal Close on Export Gas Price

German and Russian companies have reached an agreement in principal on new terms for the sale of Russian natural gas after a dispute which threatened to cut off supplies, officials said.


Sergei Yemelyanov, director of Eximgaz, a division of Gazprom, the largest Russian natural gas company, which handles exports, said Monday that two German companies, Wintershall and Verbundnetzgas, have come to a preliminary agreement on the terms of Russian gas supplies to Germany.


Wintershall, a subsidiary of BASF, has a long-term contract with Gazprom to sell gas to Germany. Last year, the company delivered an estimated 6 to 7 billion cubic meters of Russian gas through its joint ventures with Gazprom. Verbundnetzgas, once the Eastern German oil company, now privatized, buys gas mainly through Wintershall's joint ventures with Gazprom.


Early in January, Gazprom, through its partner Wintershall, threatened to stop supplies beginning Jan. 20, if Verbundnetzgas did not agree to buy Russian gas at a new, higher price. The contract between Wintershall and Verbundnetzgas expired Dec. 31. Verbundnetzgas countered that the price offered by Gazprom and Wintershall was too high. The price was not revealed.


This was the first instance when Gazprom tried to pressure a European customer to accept a higher price. Last year, Gazprom several times halted deliveries to the former Soviet republics Ukraine, Belarus and the Baltic states, forcing them to pay higher prices.


In the German case, however, the two sides came to a preliminary agreement last week, according to Yem-elyanov. "The two sides have managed to avoid a halt in deliveries at the last minute through a compromise on the price," he quoted from a joint statement by Verbundnetz and Wintershall.


Yemelyanov also said a new contract is expected to be signed by the end of January. He would not give the new price that Verbundnetz will pay, but said it was near the price of Norwegian gas.


An official at Gazprom, who asked not to be named,said Russia was selling gas at a price slightly higher than the world levels of $80 to $100 per thousand cubic meters.