Gone are the "good old days": Gazprom not anymore able to dictate prices to its European customers

Russia's Gazprom is more and more looking like a giant with feet of clay. No longer (fortunately) is Putin's money machine able to dictate gas prices to its European customers, as it used to do in the "good old days": 

In a landmark case, German energy company RWE has won the rights to amends its contracts with Gazprom, Russia’s state-owned gas exporter which has refused to budge on pricing for 40 years.

Gazprom CEO Aleksandr Medvedev said on Tuesday that the Moscow-based company will amend its contract with Germany’s second largest utility provider as well as adjust the gas pricing formula.

"We'll do this within a month. We are interested in doing this quicker because amendments will be made before final documents are signed," Medvedev said in Gazprom’s first public comment since the arbitration ruling.

Gazprom’s sudden change of heart on pricing follows a tribunal ruling last Thursday that RWE had overpaid Gazprom for spot marking prices, which forced the Dusseldorf-based company to slash over 11,000 jobs and sent profits plummeting as they lost money on consumer sales.

"It is another sign that the balance of power between Gazprom and its consumers is shifting in favor of the consumers and Gazprom is not ready for that," UBS analyst Konstantin Cherepanov said, Reuters reported.

Germany’s RWE won $1.3 billion (1 billion euros) in compensation in the dispute over pricing for long-term gas-supply against Gazprom, which now has to make retroactive payments dating back to May 2010.

At its annual shareholder meeting, Gazprom announced it has reserved approximately $6 billion (200 billion roubles) to pay off this years’ rebates. 

Read the entire article here