BILD, German

Alexey Miller and Wulf Bernotat

Finally there is some good news for 20 million consumers of gas in Germany! Next year prices of gas will fall. This promise was made by E.ON and Gazprom heads in an interview to BILD newspaper. Due to a sharp decline in oil prices, fuel prices will go down too, and are currently falling below the EUR 1 level in separate regions.

It is the first time that two powerful energy company top managers have given a joint interview. E. ON head Wulf Bernotat and Gazprom head Alexey Miller spoke with the BILD reporter about the issues of gas prices, economic crisis and energy power of Russia:

Oil prices have dropped by more than 60 per cent. When will gas prices follow?

Wulf Bernotat: Owing to a close gas price linkage to oil, the gas price will follow the oil price with a six-month time lag. Next year gas prices will drop considerably. E. ON will decrease gas prices in February and once again in April. Generally, when oil prices had reached their record high by mid-year, gas prices remained stable for a long time. That is, price linkage to oil can behave differently.

Alexey Miller: Due to this system of price linkage gas consumers and traders can thoroughly plan their trading activity and know in advance at which level the prices will be.

During an economic downfall energy demand is falling. Why doesn?t it entail a price decrease?

Wulf Bernotat: We are only at the start of the economic downfall. Its potential impact on energy consumption and prices is unpredictable. Anyway, it won?t happen in the near future, at least, due to the fact that energy consumption never decreases strongly even during financially tough periods.

How high will be future energy prices?

Alexey Miller: Speaking of a long-term pricing development, I may confidently state that the era of cheap gas is gone. The price for gas will never be at the same level as it was five or ten years ago. The reason for this is very simple: the global demand for energy resources is growing, while the number of oil and gas fields being produced keeps decreasing.

Wulf Bernotat: Essentially, I am sure that energy carriers will be more scarce and expensive. The developing countries – China, India and Russia – are experiencing an increasing energy shortage, which is more difficult to meet. The most reasonable solution in this case will be, alongside the increase in renewables, a cut in energy consumption coupled with energy saving including by means of modern power plants, economy cars and building insulation.

Mr. Miller, are you aware of the fact that many people fear the gas power of Russia?

Alexey Miller: Yes, we know that many people are apprehensive about our largeness and often associate us with dangerous and clumsy bears. This association, by the way, is quite to the point here. Since a bear is a caring father and attached to its family it has no enemies in the natural environment. Usually, it doesn?t attack if not disturbed. Therefore, all those who associate Russia and Gazprom with a bear should read more attentively the relevant information in explanatory dictionaries. Yes, we are bears! But what's wrong with that?

Mr. Bernotat, are we moving towards bigger dependence on Russia?

Wulf Bernotat: Over the last 35 years that we have been receiving gas form Russia no problems ever occurred: neither in the times of “the cold war”, nor during the period of tensed relations between Russia and Ukraine. Russia has always been an absolutely reliable partner. All the more so because our reliance is mutual: we need gas form Russia and Russia needs consumers in Germany and Europe.

Energy – a new political leverage of the 21st century?

Alexey Miller: No, and that is unfeasible. We have clearly defined obligations with regard to long-term contracts. We do not set the price; it is automatically calculated according to the formula. The supply volumes are defined for many years to come. If you pay for gas, you receive it. If you don?t pay or don?t enter into the agreement, you won?t have it.

Wulf Bernotat: Energy is the protagonist of the 21st century. Everything around including economic development, political stability, climatic changes or personal comfort is linked to the energy issue. Those who use the energy as a means of manipulation in this global interaction are isolating themselves from the international community and put in jeopardy their own economic existence.

Can energy carriers provoke wars?

Alexey Miller: Nowadays, there are no prerequisites for such gloomy scenarios. All conflicting issues arising between global energy players can be settled by negotiating. This should be retained from now on! I hope this will last forever!

Wulf Bernotat: I have a different vision of the state of affairs. The recent problems, such as climatic change, shortage of resources and an increase in prices for them have proved that energy supply is the issue of the global significance. We can see that everyone is trying to solve these problems on the global level through a dialogue and agreement rather than through the weapon. I strongly hope that the USA with the new president at the forefront will actively get engaged into this process. I think that international cooperation and partnership will be further developed supported by the cooperation between Gazprom and E. ON.

Is there a threat of a new global financial crisis?

Wulf Bernotat: The situation is really serious, but we shouldn?t panic on any account. There are simply no reasons for this. The world economy has firm footholds today. Previously, the USA and Europe played this role, now they are joined by Russia and Asia. For the first time in the political practice we are witnessing that nearly all federal governments are cooperating to solve the problem of the crisis. Therefore, I am convinced that we will manage to survive through the incoming harsh years rather quietly.

Alexey Miller: The time we are living in seems very unstable. Therefore, we are closely watching the evolution of the global economy. At the same time we intend to concentrate on our business and your daily problems. We are aware that the world needs still more energy and we will be able to keep supplying our purchasers with energy as we have been doing over the last decades.

BILD, German