Russia's Gazprom aims for more gas auctions in Europe this year

Russia's Gazprom aims for more gas auctions in Europe this year

MOSCOW (Reuters) - Russian gas giant Gazprom intends to hold more gas auctions this year after planned sales to the Baltic states, Elena Burmistrova, the head of the company's exporting arm, told Reuters in an interview.

Gazprom held a trial gas auction in September, selling over 1 billion cubic metres (bcm) for delivery to north-western Europe from 3.2 bcm on offer. It called the event, which was organized against a backdrop of tougher competition and regulations on the European market, a success.

Gazprom has said it will offer 560 million cubic metres (mcm) to Lithuania and Latvia in an auction to be held in mid-March.

"We are testing various possibilities and directions," Burmistrova told Reuters in emailed comments cleared for publication on Tuesday.

"I'm sure this auction is not the last this year," she added.

She said that of 560 mcm on offer, around 470 mcm are destined for Lithuania, while a contract for Estonia had been extended "in volumes, which are covering the Estonian market needs".

Litgas, the gas trading arm of Lithuania's state owned top energy group Lietuvos Energija, forecasts that Lithuania will consume 1.8 bcm of gas this year, down from about 2.2 bcm in 2015. 

Russian gas supplies have become increasingly politicized after Russia's annexation of Ukraine's Crimea in 2014 and following a separatist conflict in eastern Ukraine.

Lithuania, Latvia and Estonia have all been staunch proponents of cutting energy purchases from Moscow, their former Soviet overlord.

Lithuania will this year import more gas from Norway than from former sole supplier Russia after developing infrastructure to support liquefied natural gas (LNG) imports.

The country is a small market for Gazprom, with its consumption accounting for just over 1 percent of Russia's total gas exports to Europe.

Russian gas buyers in Europe, where Gazprom covers a third of gas needs, have increased pressure on Moscow, asking it to agree to more spot-pricing in gas contracts, which are predominately long-term oil-indexed deals considered to be non-transparent and expensive.

Burmistrova played down the move's significance, saying that sales via auctions were only a supplement to Gazprom's existing deals.

"The long-term contracts have been and will remain the primary and backbone (deals) for the gas trade in continental Europe," she said, adding that the company still aims to sell 10 percent of its gas exports via auction.

"This is our strategic target".

(Writing by Vladimir Soldatkin; Additional reporting by Andrius Sytas in Vilnius; Editing by Katya Golubkova/Andrew Osborn)