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Poland no longer satisfied with outcomes of court win over Gazprom, requests price change again
MOSCOW. Oct 28 (Interfax) – Polish gas monopoly PGNiG has sent a request to Gazprom to revise the price of a 1996 long-term contract downward, the former said in a statement.
Gazprom Export, in turn, told reporters: "Gazprom Export has received a request from the Polish side and is currently studying it."
Polish state-owned gas company PGNiG was successful in an arbitration claim against Gazprom last year, having achieved a revision of the supply price formula. As the victorious PGNiG said, "The court has made possible a more direct link between the pricing formula and gas prices on European markets, which should lead to a substantial improvement terms and conditions of commercial activities."
Spot prices in Europe are now at $1,000 per thousand cubic meters. However, if PGNiG had not been successful in having the court alter the terms and conditions of supplies, then the contract price would have been around $280 per thousand cubic meters in October as per the old oil peg, according to data of Russia’s Federal Anti-monopoly Service (FAS).
On October 28, 2021, PGNiG sent PJSC Gazprom and LLC Gazprom Export a letter supplementing the Polish company’s request from November 2020 to revise down the price of gas supplied under the contract dated September 25, 1996, "so that the renegotiation process takes into account the current market situation," PGNiG said in a press release.
"We’ve witnessed unprecedented increases in natural gas prices across the European wholesale market recently. This extraordinary situation provides a basis for renegotiating the price terms on which we purchase gas under the Yamal Contract. In our opinion, there is room for a reduction of the price of gas supplied to PGNiG," the company’s head, Pawel Majewski, was quoted as saying in the press release.
PGNiG also reserves the right to treat the letter as an independent request for renegotiation of the contract price, the press release said.
The long-term contract between PGNiG and Gazprom envisages supplying around 10 billion cubic meters of gas per year. According to the take-or-pay condition, PGNiG has to collect at least 8.7 bcm of the contracted gas per year.
The contract expires in 2022, and PGNiG has said on numerous occasions that it does not intend to extend it.
Meanwhile, Poland boosted gas imports from Gazprom 11% to 7.886 bcm in 9M 2021. It follows from these figures that PGNiG will already have used the annual minimum under the take-or-pay terms by the end of October.
Poland in 2021 is notably reducing purchases of liquefied natural gas, which is supposed to become an alternative to Russian gas for the country. Average annual imports are falling 5% in 2021 even compared to 2020, which saw the crisis caused by the coronavirus pandemic. Imports declined most of all in the last three months, by 25-30%, according to Gas Infrastructure Europe data.
