Is Gazprom close to deal on gas price cut for Greece΄s DEPA?

Gazprom (credit: Wikipedia)

(Capital) - Russian gas exporting monopoly Gazprom has agreed in principal to cut its price for DEPA, Greece΄s biggest natural gas utility, a source at Gazprom said to Reuters. DEPA and Gazprom have been in talks for the past few months as the Greek company has sought a price cut of about 20 percent, according to Greek energy industry sources. DEPA has threatened to go to international arbitration if no agreement is reached.

     "We have reached an agreement to adapt the price according to the market conditions. Nothing has been signed yet though," the source said without elaborating.

A senior Greek energy ministry official and one at DEPA said the talks would continue. An initial deadline to complete the talks by end-December has already expired.

Gazprom already has agreed to revise long-term gas supply contracts for some other big customers in Europe, where it generates around 55 percent of its revenues, and make "retroactive payments" to avoid losing business.

Gazprom is DEPA΄s biggest supplier, accounting for about 60 percent of purchases. DEPA imported 2.3 billion cubic metres (bcm) of Gazprom gas in 2012, compared with the 2.8 bcm it can import each year under the terms of their contract.

The contract expires at the end of 2016 and will most likely be extended.

DEPA was among the first European companies to obtain a rebate from Gazprom in 2011, amounting to about 7 percent. But the Greeks have been seeking deeper cuts.

DEPA pays Gazprom about $470 per 1,000 cubic metres of gas, according to Greek energy industry sources. This is above the $380 that Gazprom charges Europe on average.