Greece buying gas at lower prices than levels struck at Gazprom auction

A natural gas auction held by Gazprom in early September that involved the participation of 15 European companies, none of which were Greek, produced deals at 203.30 euros per thousand cubic meter, according to sources, which are above the cost levels of supply agreements for the Greek market.

Greek companies did not take part in the auction as a result of the exisiting interconnection problems concerning Greece and central Europe.

The sharp decline of oil in international markets is the main reason for the price-level difference. The price of natural gas imported into Greece is pegged to international oil prices and revised every three months. Crude and petroleum product prices of the preceding six months are factored into the equation.

Natural gas prices in Greece are expected to drop further this coming winter. Besides developing natural gas into an extremely competitive energy source for household heating, lower prices are also establishing natural gas as an attractive alternative to lignite for electricity production. This is especially true of cases concerning older lignite-fired power stations, whose operating costs are high.