UPDATE 1-Gazprom cuts gas prices for some European clients

Mon Feb 14, 2011 5:07pm GMT

* In talks on more concessions

* Company also raises take-or-pay obligations

(Adds details, companies' names)

MOSCOW, Feb 14 (Reuters) - Gazprom (GAZP.MM: Quote), Russia's top energy firm, said on Monday it agreed to cut gas prices in its long-term contracts for some European clients last year on the back of sagging demand and low spot prices.

A deluge of liquefied natural gas (LNG) in Europe over the past two years, at a time of weak demand, has often driven spot gas prices well below Gazprom's long-term contract prices, making Russian gas unattractive and unprofitable for its customers.

Gazprom did not say by how much it cut the prices, although, according to its own estimates released last week overall average prices for its gas in Europe in 2011 will be increased by some 15 percent to $352 per 1,000 cubic metres. [ID:nnLDE71A0DD]

The company also said it agreed to include a spot price element into its long-term contracts with some European clients, while raising take-or-pay obligations on some who received concessions. Gazprom long-term contracts are subject to review every three years.

The company said in its quarterly report, to Russian Accounting Standards, that it is still in talks with other European clients on potential price cuts, including Czech's RWE (RWEG.DE: Quote) Transgas and Slovak dominant gas provider SPP.   Continued...

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