Page 13 - FSUOGM Week 24

FSUOGM PIPELINES & TRANSPORT FSUOGM

Gazprom to settle $1.5bn arbitration

award to PGNiG by July 1

RUSSIA RUSSIAN state gas exporter Gazprom has Jacek Sasin said the contract revision “shows that
agreed to pay its Polish customer PGNiG $1.5bn effective government policy and a hard fight for
The pair have signed an by July 1 for overcharging for past gas supplies, Polish interests can bring good results.”
annex to their long-term the latter said on June 15. The official added that Poland would con-
supply contract as well. An arbitration court in Stockholm ruled in tinue working to diversify its gas supply.
late March that Gazprom had been charging PGNiG is already benefiting from cheaper
PGNiG too much for gas under their long-term gas since Gazprom adjusted its invoices. The new
gas supply contract. The Russian supplier was formula is largely based on gas prices in West-
ordered to adjust the pricing formula in the con- ern Europe, which are currently much lower
tract to reflect market rates in Europe, and pro- than those in Gazprom’s long-term contracts
vide the $1.5bn refund for overpayments. with European customers. To varying degrees,
PGNiG initially complained that Gazprom these contracts price gas supplies according to oil
was not complying with the award, but the Rus- prices, but with a six- to nine-month delay. This
sian firm later revised its invoices to take into means that the slump in oil and gas prices trig-
account the new pricing formula. gered by the coronavirus (COVID-19) pandemic
The pair have now signed an annex to their will only feed into Gazprom’s gas contracts in late
long-term contract, reforming its pricing struc- 2020.
ture, PGNiG said. The Polish firm added that PGNiG’s long contract with Gazprom expires
“the parties also agreed that by July 1 this year, at the end of 2022, and Poland has declared it
Gazprom will pay approximately $1.5bn in over- will no longer use Russian gas after this point. To
payments for gas supplies in 2014-2020.” achieve this, it is developing a pipeline from Nor-
In a statement, Polish Deputy Prime Minister way and expanding its LNG import capacity. ™

PERFORMANCE

Gazprom swings to net loss in Q1

RUSSIA RUSSIAN state gas giant Gazprom swung to proceedings against Italy’s Eni over the interpre-
a net loss of RUB306.2bn ($4.38bn) in the first tation of their gas supply contract. The case was
Gazprom is due to quarter, according to Russian accounting stand- initiated in January, and the two sides are in the
report its results under ards, versus a RUB199.5bn net profit a year process of agreeing who will chair the arbitration
international financial earlier. tribunal.
reporting standards Like many Russian oil and gas producers, Eni is Gazprom’s main partner in the Italian
sometime in July. Gazprom has been badly stung by the price col- gas market, receiving supplies under a three-year
lapse triggered by the coronavirus (COVID-19) agreement. Gazprom delivered 4.07bn cubic
crisis. It has suffered weaker sales in Europe, not metres of gas to Italy in January-March, versus
only as a consequence of lockdown measures but 4.97 bcm a year earlier.
also warm weather, high storage levels and rising Gazprom also revealed it had terminated
LNG imports. Low prices have also led to asset arbitration proceedings with Germany’s Uni-
impairments, while a weaker ruble has inflated per on March 27. Uniper is likewise Gazprom’s
its debts. main partner in Germany. Besides its role as a
Gazprom’s revenues were down 22.4% year customer, Uniper is also supporting Gazprom’s
on year at RUB1.126 trillion, the company Nord Stream 2 project with financing. ™
reported on June 15, while gross profits tumbled
60% to RUB450.2bn. It booked a pre-tax loss of
RUB380.7bn, against a profit of RUB297.7bn a
year earlier.
Gazprom is due to publish its first-quarter
results under international financial reporting
standards sometime in July.
The company also revealed in its report
this week that it had launched arbitration

Week 24 17•June•2020 www. NEWSBASE .com P13