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Gazprom to overhaul its gas supply and pricing system. Moscow, March 9 (Interfax) - The slump in demand caused by the global crisis and the collapse in spot prices for gas resulting from the shale revolution in the United States and oversupply of LNG have presented Gazprom with the need to overhaul its gas supply and pricing system.

E.ON, Wingas, Botas, Eni, RWE and EconGas have all demanded that Gazprom lower its prices and relax the terms of its contracts.

Alexander Medvedev, the president of the Continental Hockey League, who combines this post with that of general director of Gazprom Export, has given assurances that any concessions made so far will only last three years.

E.ON Ruhrgas was the first to make a public assault on Gazprom. Its managers did not wait for 2009 to draw to a close before starting to criticize the take-or-pay contracts. The company managed to reduce its undertake last year to 550 million cubic meters by buying an additional 632 million cubic meters in Q4 2009, a gas sector source told Interfax. The source said the advance for the gas that the company did not take ran to "double figures" (in millions). The Ruhrgas chairman has said the company would be receiving more than 10% of the contractual volume at spot prices.

The source said that the German holding's Hungarian subsidiary, E.ON Foldgas Trade, has secured a reduction in contract volumes at the same price until 2015.

But it is not just the traditionally "difficult" partners that have presented Gazprom with an ultimatum to review its terms. WIEH and Wingas (joint ventures between Gazprom and BASF/Wintershall, which is perhaps the most loyal European partner), have also demanded that all contract prices be reviewed effective from January 1, 2010. A Wingas representative told Interfax that talks on new price terms were ongoing.

WIEH also bought more gas in Q4 2009, reducing its undertake for the year to 361 million cubic meters, a source with knowledge of the matter told Interfax.

"As a joint venture between Wintershall and Gazprom, Wingas is a part of the Russian corporation. In addition, Wingas is one of the most important Gazprom sales outlets in Western Europe. Given that we are part of the Gazprom family, our terms were not of course as bad as for other European importers. We demonstrated again in 2009 that we are able to cope with competition well: Wingas received more new clients than it lost," Wingas representative Michael Sasse told Interfax.

Another company with German participation, Poland's RWE Transgas, refused to pay a take-or-pay fine and demanded that the minimum contract threshold for gas take be lowered from 90% to 80%, backdated to January 1, 2008.

Austria's EconGas paid the fine, but demanded that the threshold be lowered from 83% to 50% and the minimum daily volume from 60% to 40%. Its press office told Interfax that the company was in constant negotiation with its own counterparties, but it was unable to disclose the details about contracts and talks with any of them.

Italy's Eni was the biggest defaulter in terms of undertake with 3.3 billion cubic meters, a source said. Judging by comments by Gazprom Export, Eni honored all its take-or-pay obligations in 2009, but the price of the supplies was "adapted" in order to make Russian gas "more competitive in the Italian market."

Finland's Gasum has demanded that Gazprom revise the contract price down because Russian natural gas cannot compete with other sources of energy.

Slovakia's SPP did not honor the take-or-pay terms and received the corresponding bill. It answered with a bill of its own, for losses incurred during the transit crisis, but presented via a commercial tribunal in Paris.

Turkey's Botas also took less gas than contracts stated but, according to the Haber Turk newspaper, Gazprom has not demanded $160 million in fines. Gazprom also gave the Turkish company a 6.5%-discount on the price of gas. The paper said Botas was not alone in receiving the discount, but that other local market participants, to which some of the Russian gas supplies were transferred, received them too: Avrasya Gaz, Shell Energy, Bosphorus Gas, Enerco Enerji. A Gazprom Export source has said contract volumes were also revised - upwards.

Poland's PGNiG was one of the few clients that actually honored gas contracts in full. The RosUkrEnergo trader was unable to get its own gas out of storage in Ukraine and supply it to Poland, so the Poles even bought 700 million cubic meters of additional gas from Gazprom last year so as to plug gaps in their own gas balance. The price of the Russian gas supplied to Poland was still lowered. Russia and Poland had a long argument over the size of the tariff for pumping gas. Gazprom had paid as much as it deemed fit since 2006, and less than the Poles had asked for. Some of the Polish demands have already been confirmed by tribunals and arbitration courts in Russia. But instead of fines, PNGiG received a five-year discount on the price of gas.