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Polish gas firm gets price cut from Russia' s Gazprom

By Marcin Sobczyk

WARSAW -- Russia' s OAO Gazprom  has agreed to retroactively change the prices of natural gas for Polish state-controlled gas firm PGNiG SA, a move that will increase the Polish company' s profits, PGNiG said Tuesday.

PGNiG is in an arbitration case with Gazprom, seeking lower gas prices and challenging clauses in a contract that dates back to 1996. The company pays what is sees as excessive prices for Russian gas, higher than the average prices paid by companies in neighboring Germany, due to Poland' s inability to import significant volumes from sources other than Russia.

Gazprom agreed Monday to change the price formula for PGNiG and link it to the prices of crude oil products as well as market prices of natural gas, PGNiG said. The change to the formula will be retroactive and cover 2011-2012.

The Polish company expects the deal to add 2.5 billion-3 billion zlotys ($776 million–$932 million) to its 2012 earnings before interest, taxes, depreciation and amortization. The amended formula is contingent upon PGNiG' s withdrawal of the arbitration lawsuit against Gazprom.

Direct gas purchases from Russia amount to some 70% of PGNiG' s total imports, with the rest coming from Germany and the Czech Republic, although some of the gas imported from the latter two countries originates in Russia.

Poland is building connecting pipelines with Germany and the Czech Republic, as well as a liquefied natural gas terminal on the Baltic Coast to reduce its energy dependence on Russia.

11/06/2012

 

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