PGNiG Plans to Arbitrate Contract Prices with Gazprom

Poland’s gas monopoly PGNiG said that it intends to pursue legal action should it not be able to reach a deal on gas pricing with Russia’s Gazprom by October.

PGNiG deputy CEO Radoslaw Dudzinski said the company was preparing “to seek justice... in an arbitration court if no satisfactory agreement is reached" on cutting Russian gas prices.

Most of the long-term gas supply contracts between producers such as Gazprom and their European customers are linked to the price of oil, but that pricing formula has attracted increasing criticism since crude peaked at over $140 a barrel in 2008.  While oil prices have moved downwards, spot market gas prices remain poor.

Gazprom recently disclosed that it had cut its prices for Greece's state-controlled Depa in the first quarter of this year.

PGNiG would join the list of European gas companies including RWE AG and E.ON, pursuing arbitration against Gazprom as a result of long term gas supply contracts.