Gazprom Agrees to Link Price of Gas Sold to Engie to Gas Market,Not Oil Market
April 12 2016 - 7:40AM
Dow Jones News
By Into Landauro
PARIS--French power utility Engie SA (ENGI.FR) said one of its
main gas suppliers, Russia's Gazprom, has agreed to link the price
of gas sold to Engie to the international gas price instead of the
oil price.
The company said it agreed with Gazprom to tie the price of
long-term gas contracts to gas market conditions in a bid to reduce
the volatility of the price it pays for its natural gas, as gas
prices are less volatile than oil prices.
A spokesman for the company said the price of gas bought from
Gazprom will be tied to the international price of gas, instead of
the international price of oil. He declined to say whether the
agreement will make Engie's gas supply cheaper or more expensive at
first.
In the past, Engie, formerly known as GDF Suez, has said it
wanted to tie its gas contracts to the gas market and not to the
oil market.
Engie declined to specify how much gas it has agreed to buy from
Gazprom though it said gas supply contracts with Gazprom will
represent around 22% of all Engie's long-term gas supply in Europe
in 2016.
The deal with Gazprom is part of a Engie's strategy to reduce
its exposure to the fluctuations of energy spot prices that have
made part of its business of selling energy unprofitable over the
past few years as a result of adverse market conditions in Western
Europe.
Write to Inti.Landauro at Inti.Landauro@wsj.com
(END) Dow Jones Newswires
April 12, 2016 07:25 ET (11:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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