Oil Report

E.ON gas unit sees only limited price hikes-report

FRANKFURT, Nov 24 (Reuters) - Fallout from Russian gas price hikes for European customers should be limited because long-term contracts are linked to oil prices, the head of E.ON’s gas unit E.ON Ruhrgas said in a newspaper report on Saturday.

This came a day after Gazprom GAZP.MM CEO Alexei Miller, who heads Europe's main gas supplier, talked about possible export price hikes by his company of up to a third.

E.ON Ruhrgas’ Chief Executive Burckhard Bergmann told the Frankfurter Allgemeine Zeitung that he did not expect price increases next year to be solely driven by politically motivated hikes by Gazprom.

Miller had said on Friday Gazprom might raise its export price to Europe to $354 per 1,000 cubic metres (tcm) by the end of next year. In contrast, its forecast for the average price it will charge this year under long-term contracts is $265 per tcm.

“The long-term contracts link gas prices mainly to heating oil,” said Bergmann, who represents E.ON at Gazprom’s board.

“That is why Gazprom cannot and will not unilaterally hike the prices.

Bergmann said the main gas price driver was record oil, even if dollar weakness mitigated some of the European consumers’ problems.

If there were ever any conflicts about prices, suppliers and customers would turn to arbitration, he also said. Gazprom had always played by these rules, he added.

Reporting by Vera Eckert, Editing by Peter Blackburn