PRESS: Novatek wants to peg some gas deals to exchange prices

MOSCOW, Jun 22 (PRIME) -- Novatek-Chelyabinsk, a sales unit of Russian independent gas producer Novatek, has suggested large clients change their pricing formulas by tying them to prices at the St. Petersburg International Mercantile Exchange, Kommersant business daily reported on Thursday citing sources.

Sources told the business daily that clients that comply with the take-or-pay condition and take off at least 80% of the contracted amount each month would be able to receive up to 30% of the contracted gas at a price pegged to the exchange quotations. The price will be based on weighted average prices of the Vyngapurovskaya and Yuzhno-Balykskaya compressor stations including transportation costs and exchange commissions.

Several sources at large gas consumers confirmed the information and said that Novatek tries to stop clients from switching to gas from the exchange and the company is interested in improving sales, Kommersant reported.

Currently, the state regulates wholesale gas prices for gas monopoly Gazprom, but not exchange prices. Gazprom accounts for the bulk of gas sold at the exchange, and its exchange prices are usually lower than Novatek’s contracted prices, especially for consumers in Western Siberia and the Urals.

Novatek sells little gas through the exchange, and the company has repeatedly said that the current mechanism is not representative and has nothing to do with market trading as it is dominated by Gazprom, which is also responsible for transportation of all gas sold at the exchange.

Dmitry Makhonin, head of the fuel and energy department of the Federal Antimonopoly Service, thinks that Novatek’s position is inconsistent. “Novatek explains its limited participation in the exchange trade saying it has no spare gas for that, but at the same time it stimulates consumers to remain within the framework of direct contracts and to not go to the exchange,” he told the business daily.

The service would like the company to have a direct influence on the exchange indicator to which it wants to peg some of its gas sales, he told Kommersant.

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