Gazprom Works to Maintain Dominant Position in LNG Markets

Russia’s Gazprom is positioning itself to maintain its margins in the liquefied natural gas (LNG) markets, buying a newbuild LNG carrier and seeking price increases under a contract with Korea Gas. At the same time, some recipients of its pipeline-transported gas are asking for price cuts. 

The forthcoming reform of LNG legislation in Russia would liberalize exports of LNG, allowing companies other than Gazprom to sell abroad. Gazprom is working to maintain its clout.

‘The Gazprom Marketing & Trading’s steadily expanding fleet on LNG vessels will be used to support its growing global LNG trading portfolio,’ reads a note released on Monday by Gazprom about the delivery of a new vessel produced by Hyundai Heavy Industries (HHI). 

At the same time, Gazprom-led Sakhalin Energy is trying to draw a price increase from Korea Gas Corp, in light of the renegotiation of their contract. According to Reuters, ‘Sakhalin Energy plans adjustments to the oil-price linked contract after Brent crude prices jumped since the accord was signed eight years ago.’

Sakhalin Energy produces natural gas at the Lunskoye field from nine wells. The company recently reported to be in line with the LNG production target of 10.5 million metric tonnes for 2013. 

POLAND ASKS FOR PRICE CUT, UKRAINE GETS DISCOUNT

Poland’s Deputy Prime Minister and Economy Minister Janusz Piechocinski said on Monday that he hopes for a price cut from Gazprom. 

“The market is becoming more friendly to recipient than to suppliers,” commented Piechocisnki.

Poland is not the only country interested in price cuts. Ukraine has reputedly voiced its requests.

On Tuesday, Russian President Vladimir Putin said that Gazprom “helped Ukraine to inject the desired volumes of gas into underground storage facilities at a discount.”