Germany's cartel office said yesterday that it had started to question the justification of gas price hikes planned by distributors in the wake of oil price rallies.

"Following complaints and tip-offs, we have written to a number of companies asking them to explain the size of planned gas price increases in relation to oil price hikes," a spokeswoman for the Bonn-based authority said.

"There will be an informal exchange of views over the next few weeks after which we will decide whether further steps are necessary," she added.

The office would seek to clarify whether the scale of price rises adequately reflected higher prices paid by gas distributors to big importers, she said.

Germany imports 80 per cent of its gas and official import data show upstream prices in June have risen by 3.7 per cent over those in March.

The spokeswoman said some of the planned increases were well above this level when they should be lower, as end user prices also included other costs such as network fees.

Germany's 992 terawatt hour gas sector lacks transparency as it consists of some 650 companies operating in a complicated three-layered supply chain.

Northern German utility EWE said last week it will raise its retail gas prices for 700,000 customers by 13 per cent from tomorrow, citing soaring oil prices.

EWE also said its prices had been cheaper than those of competitors, which it expected to follow suit, and the high increase was trying to bring EWE in line with averages.

European gas prices follow those of heating oil, refined from crude oil, with a six-month time lag under a historic cross-indexation mechanism arranged between suppliers in origin countries and distributors.

Crude has risen by 40 per cent since the spring due to globally tight supply, historically high demand and political uncertainties in the Middle East and Russia. - (Reuters)