RWE expects out-of-court Gazprom contract deal in H1

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February 2, 2013 11:35 PM EST

RWE expects an out-of-court settlement with Russia's Gazprom in a dispute over gas price contracts, in the first half of this year, is financial chief told a German newspaper.

Gas contracts have been a major problem for European utilities, which agreed long-term deals with companies such as Gazprom and Statoil when prices were high, but are now having to sell to retail customers at lower tariffs.

"We expect that we will have an agreement in the first half of this year," RWE Chief Financial Officer Bernhard Guenther was quoted as saying by German newspaper Boersen-Zeitung.

The financial chief said he expected compensation from Gazprom, going back to spring 2010.

"That is a long period. We are not talking about small change here, but about a substantial sum we expect to receive," he said, without elaborating.

In December Gazprom had already said it would prefer an out-of-court settlement with RWE. Its export chief said Gazprom had reached agreements with all major importers, with the exception of RWE.

Guenther also said that RWE would consider to further cut costs and investments in the wake of ongoing low energy prices and excess capacity in order to reduce its debt pile.

RWE had 34.2 billion euros in debt by the end of September last year.

Guenther said RWE would end 2012 with a net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of around 3.5, at the same level as last year.

(Reporting by Harro ten Wolde, editing by William Hardy)

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