Russia Cuts Greek Gas Prices

Prime Minister Antonis Samaras’ plea to Russian President Vladimir Putin that Greece is paying too much for supplies from the Russian company Gazprom has worked as a deal was signed cutting the price and giving a boost to Greece’s struggling companies who are trying to cut their expenditures.

The agreement between Greece’s natural gas distributor DEPA and the Russian giant Gazprom offers a 15% price cut and takes effect retroactively, from July last year, the Greek Finance Ministry said. It extends a current deal between the two sides by another 10 years to 2026 and provides Athens with more flexibility on the amount of gas it is obliged to purchase from Russia.

That came after months of negotiations and after Athens threatened to seek international arbitration. Greece is billed $467 per 1,000 cubic meters of Russian gas, compared with an average price of $393 Moscow charges other European states. The price is now lowered to about $395 per thousand cubic meters.

“The personal intervention of Prime Minister Antonis Samaras with Russian President Vladimir Putin has ensured the successful outcome of the negotiations,” the announcement said. Greece traditionally enjoys good relations with Russia but it was not said why if that was the case that Greece was being charged so much more.

With the Greek government imposing harsh austerity measures on the orders of international lenders, record unemployment and deep poverty have followed, with energy costs especially adding big markups to the price of doing business in Greece.

The news just as Greece’s two steel companies said they’d likely shut down with most of their workers being laid off due to low demand for steel and high electricity costs to produce it.

Greece gets about two-thirds of its total gas imports from Russia. Last year, Gazprom at the last minute pulled out of a bid to buy Greece’s state-owned natural-gas monopoly, DEPA, which is on the block during a stalled privatization scheme.

That came after European Union officials were worried Russia was getting too big of a hold on European energy supplies and concentrating its power.