* Gas glut may remain for 3-5 years, economic recovery key
* In talks to renegotiate long-term gas supply deals
(Adds quotes, details)
By Wojciech Moskwa
STAVANGER, Norway, Aug 25 Germany's leading gas
buyer E.ON Ruhrgas (EONGn.DE) said it expected European gas
markets to stay oversupplied in the medium to long term and it
was in talks to renegotiate long-term contracts with suppliers.
"We said the medium to long term, which means not something
that we are likely to see in three to five years," Chief
Executive Klaus Schafer said on being asked when Europe's gas
glut would end.
"It depends very much on the pick-up of some of the
economies of Europe and depends on the question of conversion of
some power plants from other fossil fuels to gas," Schafer told
reporters at a oil and gas conference in Norway on Wednesday.
"It will not last forever but for quite a while."
E.ON's wholesale gas unit, one of Europe's biggest gas
buyers from Russia, said that it was in talks with suppliers to
change long-term gas supply contracts.
These contracts do not reflect the recent decoupling of spot
prices from those in long-term deals and need to be more
flexible to take into account changing economic conditions in
Europe, it said.
"We believe that the long-term contracts need to be
re-engineered for future decades, not just renegotiated as in
the past but put on new terms that mostly reflect price levels,
flexibility and indexation of price formats," Schafer said.
E.ON said talks were continuing, but results were scant so
far. "We have already achieved something but still have a way to
go," said Hans-Peter Floren, a member of the E.ON Ruhrgas
Schafer said gas consumption in Europe tumbled by 7 percent
last year and by 5 percent in Germany. Also, shale gas
discoveries have made the United States more self-reliant and
have diverted more LNG (liquefied natural gas) supplies to
Europe -- all helping to push down spot prices.
"Experts expect the share of LNG in EU30 (30 European
countries') gas supplies to rise from about 10 percent now to
24-25 percent in 2020," Schafer said.
(Editing by Jane Baird)