The ad hoc Arbitral Tribunal in Stockholm ruled in the partial award that the contractual condition for PGNiG to demand a revision of the price of gas supplied to Poland under the Yamal Contract had been met.
The Arbitral Tribunal granted PGNiG’s claim and ruled in its partial award that the contractual condition for PGNiG to demand a reduction in the price of the long-term contract under which gas is supplied to Poland by the Russian monopoly Gazprom (the so-called Yamal Contract) had been met. For years, Gazprom has rejected any possibility of such a revision, and as a result the contract price for PGNiG has significantly exceeded prices on Western European markets.
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 Piotr Woźniak, President of the Management Board of PGNiG S.A..
The current contract price did not reflect market levels of gas prices, therefore in 2014, PGNiG decided to apply a contractual option of revision of the contract price, as provided for in the Yamal Contract. After the expiration of the contractual period for renegotiation, in May 2015, the Polish company referred the dispute for resolution by the ad hoc Arbitral Tribunal in Stockholm and in February 2016 it filed a statement of claim against Gazprom.
The Yamal Contract, signed in 1996, provides for the supply of approximately 10 bcm of gas annually. According to the take-or-pay commitment imposed by Gazprom, PGNiG has to collect at least 8.7 bcm of the contracted fuel per year. The Contract is valid until 2022.
PGNiG’s strategy is to consistently diversify the sources and directions of gas supplies. In this way, the company is strengthening its competitive position, while ensuring the security of the gas market in Poland. Currently, PGNiG’s main focus is on the construction of the Baltic Pipe gas link, which from 2022 onwards would enable it to import gas produced in Norway, where it has had its own production assets for a decade now, holding interests in 21 licences. PGNiG is also importing the liquefied natural gas (LNG). Last year, LNG accounted for 13% of total PGNiG’s import. The LNG was supplied by companies from Qatar, Norway and the United States.