"Pricing the invisible commodity"
29 May 2013, 4 - 8 PM CET
TUSIAD Avenue des Gaulois, 13, Brussels 1040
Will long-term contracts (LTCs) remain the basis for supply arrangements between Gazprom and European energy consumers? Is natural gas a "unique" commodity, the price of which should be set outside of market pricing mechanisms ? While LTCs between Gazprom and EU energy groups have tended to underscore the back-bone of supply arrangements in the gas trade for some time, such questions are now being asked due to profound changes currently taking place in the European energy markets. The arrival of new technologies, regulatory developments such as the Third Package, new gas-to-gas competition and the American "shale revolution" are all putting pressure on the highly regulated space of Europe"s conventional supplier-consumer gas relationships. Questions are being asked about the longer term future of LTCs, whilst new debates have arisen about a mutually agreeable approach for pricing the gas traded between buyer and seller. Is the "writing on the wall" for LTCs in this new European era of hub pricing, liberalisation and greater flexibility in delivery methods ?
During an interactive discussion held by the Brussels Energy Club on May 29, Sergei Komlev addressed this debate by drawing on some of the key arguments from his recently published paper: Pricing the "Invisible" Commodity. Speaking in a personal capacity, Sergei Komlev further explained why he felt that long term contract arrangements should remain as a viable mechanism underscoring gas deliveries to Europe, gave his thoughts on gas pricing at both the EU-Russia and global levels, and enlightened us on the debate over the role of state intervention Vs market approaches as a means of optimizing energy ties between consuming and producing countries.
Head of Directorate of Contract Structuring and Price Formation