Slump in gas demand forces oil-link rethink

With EU gas demand and prices set to fall next year, importers want to renegotiate their long-term contracts. But Gazprom is sitting tight

Slumping European gas demand, stemming from shrinking eurozone economies, could force exporters to accelerate the break from traditional oil-linked natural gas contracts. Most of Europe’s gas is bought under long-term contracts with prices indexed to oil, but while European gas prices have remained relatively flat over the last two years, oil prices have soared, meaning gas buyers have suffered huge losses on oil-linked contracts. Large utilities, including Germany’s RWE and E.On, and Polish state-controlled PGNiG have taken Europe’s largest gas supplier, Russian monopoly Gazprom, to arbitration over expensive gas contracts. Meanwhile, a host of other buyers, including France’s GDF Suez and