Azernews.Az

MOSCOW – The world's largest gas export monopoly, Russia's Gazprom, said on Monday it was ready to cut prices on its long-term contracts to Europe as the volume of paid for but undelivered gas mounted, Gazprom said on Monday, RIA Novosti reported.

Gazprom, which supplies Europe with a quarter of its energy needs, has come under fire from customers who started buying gas on the spot market where prices are lower than on long-term contracts preferred by Gazprom. Gazprom had to relent as the international financial crisis cut demand.

On Monday, it said the 2010 volume of paid for but undelivered gas would exceed last year's level by more than two times to over 10 billion cubic meters.

"Long-term contracts remain an indispensable term of gas trade in continental Europe. However, Gazprom is ready to take consumers' opinion into account and pursue a flexible trade policy if the gap between contract and spot prices becomes significant," it said in a statement.

"If one of the parties says that market conditions differ significantly from what was expected, the parties will then start negotiations on the revision of the contracted price."

Gazprom conceded to E.ON Ruhrgas which demanded Gazprom cut its prices or change contract terms. Gazprom agreed to sell some of the gas at spot market prices on condition that if E.ON Ruhrgas failed to buy minimal amounts of gas, deliveries at spot market prices would also be cut.

Similar agreements were reached with German-Russian gas traders WIEH and Wingas.

Gazprom said it had long-term contracts worth three bcm of gas.