Gazprom Considers Claiming Penalties From EU Customers

Russian energy group Gazprom could claim penalties from European Union customers for falling short of contracted purchase volumes by 8-9 billion cubic meters of gas.

Sergey Chelpanov, Deputy Chief Executive of Gazprom Export, the export arm of the energy holding, stated that the claims would be based on the "take or pay" clause in the contracts that force the buyers to pay for the entire contracted volume. Chelpanov further stressed that there was no question of scrapping penalties for failure to buy the full amount stipulated in the applicable contract.

Chelpanov"s statements followed media reports that some European customers of Gazprom were trying to negotiate an exemption from penalties this year, arguing that Ukraine had not been forced to pay any penalties either.

Sergey Chelpanov announced that Gazprom was planning to export 45 billion cubic metres of natural gas to Europe in the last quarter of 2009, bringing the total volume of exports in 2009 to 142.5 billion cubic metres.

Gazprom is the world"s leading producer of natural gas and the source of one quarter of Europe"s natural gas supply. The Russian energy group produced 550 billion cubic metres of natural gas in 2008 and has planned an annual production of 492 billion cubic metres for this year.

The company on Monday announced a 49.8 per cent decline in profit in the first half of the year compared to the year-earlier period as a result of rising spending. Gazprom concluded the first half of 2009 with a net profit of 305.8 billion RUB (10.65 billion USD), down from 609.4 billion RUB in the first six months of 2008. Gazprom sales decreased by 6.6 per cent in the reporting period to 1,640 billion RUB.