Gazprom Inks MOU with Engie, One Year On

Gazprom said it signed a memo of understanding with France’s Engie on April 24 that “aims to promote co-operation” between the two companies, although neither company elaborated on what the MOU contained.

In April 2016 Engie announced that Gazprom Export agreed to change pricing of its long-term supply contract from mainly oil-indexation to being priced off European gas hubs, a significant shift. Engie (formerly GDF Suez) is the largest gas supplier in France but also operates elsewhere across Europe.

The MOU was signed in the course of a working meeting in Paris between Gazprom CEO Alexei Miller and Engie CEO Isabelle Kocher the same day during which Gazprom said the two firms discussed the progress of and prospects for co-operation in the gas sector, including Nord Stream 2 (NS2). Five companies investing as Gazprom's partners in NS2’s construction – including Engie – agreed a new NS2 financing structure on April 24.

Engie CEO Isabelle Kocher (Photo credit: Engie)

Gazprom also noted that its gas exports to France increased by 11.4% in the period from January 1 to April 23 2017, compared with the same period of 2016; it also noted that Gazprom’s 11.5bn m³ exports to France in full year 2016 were 18.2% higher than in the previous year.

French imports are not the same as Engie’s imports, as it has Europe-wide businesses. In 2015, Engie received 10.3bn m³ from Gazprom. But the French company remains a significant LNG importer, and in 2015 contracted with US LNG supplier Cheniere to buy up to 12 cargoes/yr in 2018 to 2023.

In an interview with Miller published April 25, Reuters quoted the Gazprom chief saying that its European market share is poised to rise, despite Qatari and US LNG competition, and that in 2016 it supplied 179bn m³, or about one-third of Europe’s needs, compared to historically about a quarter.

Mark Smedley