PGNiG right to demand fair price: Gazprom to cough up cash

PGNiG's president, Piotr Woźniak, welcomed the ruling of the Swedish Arbitration Tribunal. Radek Pietruszka/PAP

The Arbitration Tribunal in Stockholm, Sweden, ruled on Saturday that Poland's national gas company, PGNiG, is justified in demanding lower gas prices from the Russian gas giant, Gazprom.

In May, 2015, PGNiG filed a claim against Gazprom on the grounds that the gas prices charged by the Russian giant under the Yamal agreement were too high. 

The Polish company subsequently demanded that gas prices be adjusted to reflect trends in European markets and, on Saturday, the Court of Arbitration in Stockholm issued a partial ruling stipulating that PGNiG had met the terms of the Yamal agreement and was therefore entitled to a price reduction on the gas supplied by Gazprom.

The Yamal agreement was signed in 1996, and stipulated that Gazprom would supply Poland with 10 billion cubic meter gas deliveries to Poland per year until 2022. Last week, PGNiG signed new gas supply agreements with two US companies that will come into force in 2022, therefore reducing Polish dependence on Russian gas.

PGNiG's president, Piotr Woźniak, welcomed the ruling of the Swedish Arbitration Tribunal. 

“The Tribunal granted PGNiG’s key arguments indicating the need of reduction of the contract price and rejected Gazprom’s arguments in support of maintaining the current, non-market pricing terms under the Yamal Contract. We are satisfied with the Tribunal’s ruling which confirms PGNiG’s right to demand a reduction of the contract price and we await the reduction of the contract price to the level of market prices at a later stage of the proceedings,” said Woźniak.

The Arbitration Tribunal is scheduled to determine later this year the reduced gas prices in the agreement between the two companies, which will come into effect retroactively from November 1, 2014.