RWE, Gazprom Deal Talks Fail

Joint venture discussions on strategic partnership in power generation between RWE and Gazprom have failed.

"RWE and Gazprom today decided by mutual agreement to terminate at the end of the year their exclusive talks on a potential joint venture for the construction and operation of power stations," the German company said in a statement.

In July, the two companies entered into a Memorandum of Understanding to commence exclusive negotiations to form a joint venture that would bring together existing or proposed gas and coal power plants in Germany, United Kingdom and the Benelux countries.

"Although our discussions were conducted in a very constructive manner we were unfortunately not able to agree on a framework for cooperation which would be sustainable for both parties," said RWE chief executive, Juergen Grossmann.

The talks had reportedly been extended twice over demand and margins concerns impacting the Germany market.

The failure of joint venture also puts focus back on an on-going dispute between the German utility and its Russian supplier over the renegotiation of long-term gas supply contracts. 

Analysts had indicated that the potential tie-up could have seen the resolution of issue which, together with economic losses from resulting from Germany's decision to phase out nuclear power, has impacted RWE’s bottom-line.

Followers of the Southern Corridor pipeline process had also mused whether the joint venture would have impacted participation by Europe's fifth-largest utility in the proposed Nabucco pipeline.