Gazprom gas prices double Israel's

Gazprom charges European customers $11.75 per million BTU, while the Tamar-IEC deal is worth $5.20-5.30 per million BTU.

Russian energy giant Gazprom (RTS: GAZP; LSE: OGZD; DAX: GAZ) sells its natural gas to European customers at an average price of $11.75 per million British Thermal Units (mmBTU), reports Russian news agency "RosBusinessConsulting" (RBC). This is double the average price of natural gas contracts in Israel, where the latest deal between the Tamar partners and Israel Electric Corporation (IEC) (TASE: ELEC.B22) was set at $5.20-5.30 per mmBTU. Smaller gas supply contracts were set at $6-7 per mmBTU.

Gazprom charges high rates because of transportation costs: thousands of kilometers through pipelines from natural gas fields in Russia to customers in Western Europe. Gazprom, the world's largest natural gas company, provides 30% of Europe's natural gas. It plans to export 154 billion cubic meters of gas in 2012 - an amount equal to one fifth of Israel's current gas reserves.

Gazprom has been interested in Israel's offshore gas fields, including Tamar and Leviathan, for a long time. However, energy experts doubt that it will try to acquire direct holdings in exploration licenses or reservoirs at this time. Gazprom's interest in Israel may be linked to worries about future competition in the European market, and it might want to buy Israeli gas itself.

On Friday, "RBC" reported that Gazprom CEO Alexei Miller and Italian energy giant ENI CEO Paolo Scaroni reached a deal on Gazprom gas exports to Italy. Gazprom earlier announced that it planned to raise the price of gas in long-term contracts with customers in Italy, France, Slovakia, and Austria.

French bank Société Générale believes that Gazprom gave ENI a 6% retroactive discount on gas deliveries from January 1, 2011. Italy bought 26 billion cubic meters of gas from Gazprom for $400 million in 2011.

Published by Globes [online], Israel business news - - on March 4, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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