Unsurprisingly, given the present context of uncertain demand and looming gas bubble, with Europe as a whole well (over?) contracted in long-term supply contracts, the present update shows little difference from the previous, one-year old version. Indeed, no new contract was added to the database.
The recently disclosed update of Cedigaz’ database on Long-Term Pipeline Supply Contracts in Europe shows limited contractual activity during the past 12 months. Since the database’s last update in June 2014, only 3 new contracts, all with UK buyers, have been identified by Cedigaz for a total volume of 6.56 bcm/yr. with durations ranging from 6 to 10 years. This contrasts with the 18.3 bcm/yr. contracted or renewed in 2013, including 10 bcm/yr. of Shah Deniz contracts and the extension for 4 years (until the end of 2017) of the 6.2 bcm/yr. between Gazprom and Panrusgaz (Hungary).
At the beginning of 2015, Cedigaz’s database lists 110 contracts in force in Europe representing 410 bcm/yr. (including intra-European contracts), of which 60 contracts (263 bcm/yr.) with countries outside Europe (Algeria, Azerbaidjan, Iran, Libya and Russia), 25 contracts with Norway for a total 87 bcm/yr. and 25 contracts (61 bcm/yr.) with other countries inside Europe (mainly Dutch contracts).
The last 14 months since the Cedigaz long-term-contracts database (1) was last updated has shown a continuation of the wave of renegotiations that has gained momentum since 2010, recently culminating with the announcement by ENI of its agreement with Gazprom. The deal, which reduces both the price and take-or-pay obligation of contracted gas, has been hailed by the gas community has signaling a move away from oil-indexation by the Russian gas giant. Based on ENI’s declarations some analysts contend that the gas is now 100% hub indexed. According to Argus Media, the actual arrangement is more subtle, the pricing formula would still be oil-based but would include a price corridor based on TTF prices.