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Exxon Mobil Corporation Message Board

  • bluecheese4u bluecheese4u Jul 1, 2013 9:19 AM Flag

    Gas exporters to defend pricing as courts reject oil link

    Gas exporters to defend pricing as courts reject oil link

    Posted on July 1, 2013 at 7:07 am by Bloomberg

    The world’s biggest natural gas exporters will seek to defend linking prices to the cost of oil even after courts ruled they overcharged customers and rising output from the U.S. to Australia challenges their dominance.

    Tying gas costs to oil will dominate “in the long-term” as the system provides visibility and transparency for buyers, the Gas Exporting Countries Forum said before its second summit of heads of state today in Moscow. RWE AG (RWE) said June 27 an arbitration court ruled that Germany’s second-largest utility had paid Russia’s OAO Gazprom (GAZP) too much since May 2010 and forced the group’s biggest producer to add links to market prices in its formula.

    Utilities are challenging the 40-year-old system after European market prices slumped below oil-linked contracts as the debt crisis cut demand for energy. State-controlled Gazprom has earmarked as much as 200 billion rubles ($6 billion) for potential rebates to European utilities this year. The estimate is higher than the 114 billion rubles set aside in 2012 and enough to meet all necessary payments, Chief Financial Officer Andrey Kruglov said June 27 in Moscow.

    “This could well be the tipping point that ushers in a new commercial era for European gas,” Trevor Sikorski, an analyst at Energy Aspects Ltd. in London, said June 28 by e-mail. “If so, the impact will be felt wider than Europe, with Asian customers looking longingly at European and U.S. hub prices, and seeing that commercial arbitration might be one way of lessening the burden.”

    Sonatrach, RasGas

    Electricite de France SA, Europe’s biggest power producer, in April obtained lower gas prices for its Italian unit Edison SpA through arbitration with Sonatrach of Algeria, Europe’s third-biggest supplier after Russia and Norway. Qatar’s Ras Laffan Liquefied Natural Gas Co. has also lost an arbitration case related to oil-linked

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