Gazprom and PGNIG reached agreement on gas price

October 6, 2012

Gazprom and PGNIG reach agreement on gas price

Warsaw hosted a working meeting between Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Grażyna Piotrowska-Oliwa, President of the PGNiG Management Board.

The meeting resulted in an agreement to adjust prices in the contract on natural gas supplies to Poland.

Alexander Medvedev and Grażyna Piotrowska-Oliwa signed the Supplementary Agreement to the contract to adjust the price for natural gas supplies to Poland via the Yamal - Europe gas pipeline. The agreed price takes into account the current market prices of gas and oil products. At the same time, the basic principles of gas trade have been preserved intact, like long-term contracts, take-or-pay principle and oil-pegged prices. The spot component, taking into consideration the state of play of the Polish market, will not be included directly into the contract.

The Agreement allows for termination of the proceeding by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).

"We have found a mutually acceptable mechanism of the Russian gas price adjustment which introduces into the contracts, in a flexible way, certain changes that have occurred on the gas markets in Poland and Europe. The fact that we have reached an agreement proves that reliable partners are always able to find a mutually beneficial solution which maintains the balance of interests of both parties," Alexander Medvedev said.

"By signing this agreement Gazprom and PGNIG have shown that through business-focused negotiations we can find a positive solution, beneficial for both sides. This is a crucial step in the path of restoring competitiveness of PGNIG long-term gas contracts," Grażyna Piotrowska-Oliwa noted.

Background

PGNiG is Poland's largest petroleum company dealing with oil and gas fields development, energy resources production, storage and transportation, oil and gas transmission network construction and expansion, as well as natural gas exports and imports.

In 2011 Gazprom supplied Poland with 10.25 billion cubic meters of Russian gas.

The contract on Russian gas supplies to Poland and the contract on Russian gas transit via Poland are effective until 2022 and 2019 respectively.