EON, Gazprom in arbitration over gas prices

1st August 2011, Comments 0 comments

The gas business of German utility EON announced Monday it had launched arbitration proceedings over long-term supply deals with Russia's state-owned Gazprom.

"We can confirm that we have opened an arbitration process related to our supply relationship with Gazprom," an EON Ruhrgas spokesman said in an emailed statement, following German media reports.

He said that talks with Gazprom were continuing with the aim of finding an negotiated settlement. EON is Gazprom's single largest customer.

The deputy director general of Gazprom Export, Sergei Chelpanov, said the company shared the goal of an amicable solution.

"This arbitration mechanism in no way hinders the negotiation process. We judge that the search for a solution will proceed," he said.

EON, the world's largest private utilities group, has been trying for several months to negotiate a lower price with Gazprom.

In its long-term contracts, the gas purchase price is pegged to the often rising price of oil while its sale price for customers has dropped significantly, putting major pressure on profits.

Gazprom supplies about one-third of the gas sold by EON Ruhrgas.

© 2011 AFP

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