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    Gazprom Still Overcharging for Gas: PGNiG

Summary

Gazprom has not complied with the Stockholm award, PGNiG says.

by: Joseph Murphy

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Top Stories, Europe, Premium, Corporate, Litigation, News By Country, Poland, Russia

Gazprom Still Overcharging for Gas: PGNiG

Russia's Gazprom has failed to comply with a ruling by the Stockholm arbitration tribunal requiring it to cut the price of gas supplies to Poland's PGNiG, the latter company said on its website on April 24.

The court ordered Gazprom in March to amend its pricing formula under the long-running supply deal it has with PGNiG, known as the Yamal contract, tying prices to market rates in Europe rather than indexing them to oil. It also has to pay the Polish firm a $1.5bn refund for past overpayments since November 2014.

Gazprom has failed to honour the award, however, continuing to base its invoices on the previous pricing formula, PGNiG said.

"PGNiG has requested the supplier to correct the invoices issued in recent weeks, indicating that the arbitration award is final and binding on both parties," it continued. "PGNiG believes the supplier’s failure to respond can be considered wilful disregard of the award. This constitutes a gross breach of the terms of the Yamal contract as, at the time when the arbitration award was handed down, the new pricing formula became automatically its part."

PGNiG said it would "take all steps necessary" to enforce the award and recover overpayments. By failing to comply, Gazprom may be continuing to abuse its dominant market position, PGNiG said, adding it was considering notifying the European Commission of these anti-competitive practices.

The Yamal contract, signed in 1996, covers the annual delivery of 10.2bn mof gas and includes a take-or-pay clause, requiring PGNiG to pay for at least 8.7bn m3 of gas each year regardless of how much it needs. PGNiG took 9.73bn m3 of gas from Gazprom last year, according to the Russian firm's records, down from 9.86bn m3 during the previous year.

The contract is due to expire at the end of 2022, and PGNiG has notified Gazprom that it does not intend to renew the deal. By that point Poland hopes to have greater access to alternative sources of supply, including extra LNG supplies and Norwegian piped gas deliveries.