Expiring gas contracts in Europe offer chance to renegotiate prices
PARIS -- Over the next 10 years around two-thirds of the contracts governing imports of gas into the European Union will expire, providing a window of opportunity for European governments and companies to renegotiate prices, Fatih Birol, chief economist at the International Energy Agency, said Wednesday.
Global energy markets have seen a significant shift in recent years. The U.S. boom in shale production has lowered gas prices dramatically there, while fuel costs in Europe have remained high.
"The main reason why Europe is losing today is that European gas prices are up to five times higher than in the United States," Mr. Birol said in an interview.
The expiration of gas contracts worth 511 Bcf within the next 10 years could help redress this balance.
"When they expire there will be important leverage in the hands of European governments and European companies in order to negotiate the new contracts, which can reflect the market realities better than the existing contracts, which may be a way of Europe narrowing the gap between European and American gas prices," Mr. Birol said.
"When those contracts were made, it was the market of sellers. Now the market is going to be a market of buyers," he said.
Dow Jones Newswires