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    PGNiG requests price cut from Gazprom

Summary

The company said it wanted to ensure the renegotiation process "takes into account the current market situation."

by: Joseph Murphy

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Complimentary, NGW News Alert, Natural Gas & LNG News, News By Country, Poland, Russia

PGNiG requests price cut from Gazprom

Poland's state-owned gas company PGNiG said on October 28 it had asked Russia's Gazprom for a gas price cut under its long-term supply contract.

PGNiG has submitted a letter to Gazprom and its export arm with the request. It said this letter supplemented one it sent to Gazprom in November last year seeking a price revision.

The company said it wanted to ensure the renegotiation process "takes into account the current market situation," and it is hoping for a change in gas pricing from November 1.

“We’ve witnessed unprecedented increases in natural gas prices across the European wholesale market recently," PGNiG CEO Pawel Majewski said in a statement. "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." 

PGNiG and Gazprom's so-called Yamal contract came into force in 1996 and covers 10bn m3/year of gas. The take-or-pay clause in the contract requires PGNiG to pay for at least 8.7bn m3 of gas annually. The contract is due to expire at the end of 2022 and PGNiG has insisted it will not renew it, replacing Russian volumes with LNG and piped gas from Norway.

A previous pricing dispute between Gazprom and PGNiG was resolved only in June last year, when Gazprom agreed to pay PGNiG $1.5bn in compensation for previously overpricing supplies, as per an order by a Swedish arbitration court.