Page 13 - FSUOGM Week 17

FSUOGM POLICY FSUOGM
Gazprom fails to comply with court ruling in gas price dispute with PGNiG
POLAND
RUSSIA’S Gazprom is yet to cut the price of its gas supplies to Poland, despite a court ruling last month requiring it to do so, Polish gas firm PGNiG said on April 24.
The Arbitration Institute of the Stockholm Chamber of Commerce ruled in late March that Gazprom had been overcharging PGNiG for gas, following a five-year legal dispute between the pair. Gazprom was ordered to adjust the pricing formula in its long-term supply agreement with PGNiG, known as the Yamal contract, to reflect market prices in Europe. It was also required to pay the Polish firm a $1.5bn refund for overpay- ments since November 2014.
Gazprom has so far failed to comply with the award, PGNiG said in a statement last week, and is still issuing invoices based on the previous pricing formula.
“PGNiG has requested that the supplier cor- rect the invoices issued in recent weeks, indicat- ing that the arbitration award is final and binding for both parties,” the Polish firm said. “PGNiG believes the supplier’s failure to response can be considered a wilful disregard of the award. This constitutes a gross breach of the terms of the Yamal contract as, at the time when the arbitra- tion award was handed down, the new pricing formula became automatically its part.”
PGNiG now makes payment for Russian gas according to the new formula. It also said it would “take all steps necessary” to see the award enforced and recover its losses since 2014. By failing to comply with the award, Gazprom may be continuing to abuse its dominant position in the gas market, PGNiG, adding it was consider- ing notifying the European Commission of this anti-competitive behaviour.
Gazprom is yet to comment on the arbitra- tion ruling.
PGNiG receives gas from the Russian sup- plier under a supply agreement signed in 1996,
known as the Yamal contract. The contract, which encompasses the annual delivery of 10.2bn cubic metres of gas, includes a take-or- pay clause, meaning that PGNiG must pay for at least 8.7 bcm of gas each year regardless of whether it needs that much. According to Gaz- prom figures, the company took 9.73 bcm of Russian gas in 2019, down from 9.86 bcm the previous year.
PGNiG’s contract with Gazprom expires at the end of 2022, and PGNiG has given the Rus- sian firm official notification that it does not intend to extend the deal. At this point Poland hopes to be able to get the bulk of its gas from alternative sources.
One project to achieve this is Baltic Pipe, which aims to run a 10 bcm per year pipeline connecting Poland with offshore Norwegian gas fields. Polish gas grid operator Gaz-Sys- tem secured a key permit last week to build the pipeline’s offshore section. The operator is also working to expand the capacity of the Swinou- jscie LNG import terminal by 50% to 7.5 bcm per year, and awarded contracts for the project in February.
Poland has also commissioned a new internal pipeline in its south-east that will serve as part of the EU-backed North-South Gas Corridor (NSGC) initiative, its government announced on April 27. The Hermanowice-Strachocina pipe- line, stretching for 70 km, will improve domes- tic transmission while also facilitating future cross-border trade with Poland’s neighbours.
NSGC aims to form a corridor for gas trade from the Swinoujscie terminal on the Baltic Sea all the way to Krk Island in Croatia, where another regasification terminal is under con- struction. The Hermanowice-Strachocina link will form part of this corridor, while also serving a new pipeline between Poland and Ukraine. ™
Week 17 29•April•2020 w w w . N E W S B A S E . c o m P13