What Is the Future and Evolution of Long Term Gas Supply Contracts in Europe?

July 7, 2017 2:30pm

Sergei Komlev
Head of Contract Structuring and Pricing Directorate
Gazprom export LLC

Christophe Poillon
Vice President European Affairs at GRTgaz and Chairman of the Task, Force on Security of Supply
GIE

Francisco de la Flor
Director of Regualtions
Enagas

Lorenzo Coppi
Executive Vice President
Compass Lexecon

Two philosophies behind gas pricing models: spot markets and traditional contracts (Brent based model price)
  • Are we moving to a universal price in Europe?
  • Is Europe becoming sufficiently interconnected and liquid that the price of gas is the same less transportation costs?
  • How will long-term contracts will be structured in the next 5-10 years?
  • What are the implications of the OPEC and non-OPEC countries deal and when we can expect to see the impact on gas prices?
  • Are we moving from a large proportion of oil-indexed gas to gas on gas pricing contracts?
  • When would it be more convenient to have oil-indexed contracts in your portfolio?
  • Would producers agree on a long-term basis to sell gas at commodity prices?
  • What is the price benchmark for new contracts? Commodity price vs longer contract terms.
  • Advantages and disadvantages of the commodity price: “Scarcity value”:
  • Can you control your risk exposure by agreeing a commodity price, which will prevail at a certain time in the future?
  • Pricing mechanism: is there an acceptance of the hybrid model proposed by Gazprom?
  • What is the difference between gas and other commodities?
  • Is there a rationale for long-term contracts with high flexibility to be priced above hub prices?
  • What competitive advantage can producers offer their customers in a fully liquid market?
  • Have producers introduced tracker prices with their customers in order to capture the value of forward gas prices?
  • How do you measure annual offtake flexibility?
  • How the diversification of supply sources are impacting upon gas supply contracts?