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Poland agrees with Gazprom on gas price reduction

The agreement makes it possible to stop the arbitration process in Stockholm

Photo ITAR-TASS

Photo ITAR-TASS

WARSAW, November 6 (Itar-Tass) — The Polish energy group Polskie G·rnictwo Naftowe i Gazownictwo (PGNiG, literally: Polish Petroleum and Gas Mining) has reached an agreement with Russia’s natural gas monopoly Gazprom on the reduction of prices for the supplied natural gas to the country. Representatives of the companies signed in Warsaw an addendum to the so-called Yamal agreement, which amends the financial terms of the contract, PGNiG reported on Tuesday.

“The new price conditions reflect the changes that have occurred in the European gas market in recent years. Therefore, the formula on which we agreed through negotiations, will also take into account the market gas prices, and not only quotations of petroleum products, PGNiG stressed.

The agreement makes it possible to stop the arbitration process in Stockholm, which was initiated by the Polish side on February 20.

“Gazprom and PGNiG have shown that a positive decision, which will be beneficial to both partners can be made through business negotiations,” CEO of the Polish company Grazyna Piotrowska-Oliwa said. According to her, this is a good sign on the way to the return of competitiveness of PGNiG’s long-term gas contracts on the European markets.

On October 29, 2010, Poland and Russia signed protocols on the introduction of changes to the bilateral gas agreement, which is called the Yamal agreement here. They provide for an increase in the natural gas supply volume to the country up to 11 billion cubic meters in 2012 and subsequent years. Under the reached agreements, the Polish side is to buy annually 10.25 billion cubic metres of gas. The new formula for determining the gas price agreed between PGNiG and Gazprom allows the Polish side to save between 2.5 to 3 billion zlotys (up to 1 billion US dollars).

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