Gazprom Denies Pricing Pressures

Gazprom has denied a newspaper report on Friday that Germany's E.ON, is seeking to lower prices for gas supply according to Reuters.

The Russian gas giant denied reports in the Vedomosti business daily that the Ruhrgas unit the world's largest utility by sales, wants to adjust supply contracts because of clients' demand.  The article cited unnamed sources at Gazprom.

"No such talks are underway at the moment," Gazprom's spokesman Sergei Kupriyanov told Reuters.

Gazprom is facing a stiff challenge in Europe where spot gas prices are below its own long-term contract prices, which link natural gas and oil product prices.

Some analysts think that the firm will have to make some concessions in order not to lose its market share.

"We believe that Gazprom will ultimately have to give price breaks to all its customers that have or will have an alternative supplier (such as Germany, Italy, France, Turkey and the Netherlands)," Troika Dialog said in a note.

Last winter, the company offered some European clients a spot-pricing element in their contracts to stimulate offtake.

"We continue to be in talks with all of our suppliers about adjusting long-term delivery contracts to the most recent market conditions, but we won't comment on details," said E.ON's spokesman at the Essen headquarters.

Some 29 percent of gas procured by E.ON Ruhrgas in the first six months of 2010 came from Gazprom.

Vedomosti also reported that so far no other clients of Gazprom have recently requested to soften the terms of their contracts.

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