Page 17 - FSUOGM Week 44
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FSUOGM POLICY FSUOGM
PGNiG seeks price cut
from Gazprom
POLAND POLISH state gas company PGNiG has asked for less, however, as gas prices are calculated against
gas price talks with Russian supplier Gazprom, it oil benchmarks with a time delay, typically of
The pair's contract announced on November 3. between six to nine months.
allows either side to The request comes only months after Russia’s Moscow-based Vygon Consulting estimates
seek a price revision Gazprom was forced to pay $1.5bn to PGNiG for the cost of US LNG to Poland to be 20-30% less
every three years. previously charging the company too much for than the cost of Russian piped gas. This is likely
gas, under a Swedish court order. to be the discount PGNiG is seeking, the con-
PGNiG and Gazprom’s long-term contract sultancy said.
allows either side to ask for a revision in price PGNiG’s contract with Gazprom runs out at
terms every three years “if it determines that they the end of 2022 and the company has repeatedly
fail to reflect current market conditions,” PGNiG said it will not renew the deal. It hopes to replace
said. Russian gas with LNG, mainly from the US, as
The pair have clashed often over price over well as Norwegian gas via the planned Baltic
the years. PGNiG won a five-year legal dispute Pipe.
in March after the Stockholm Arbitration Tri- The Polish company announced on Novem-
bunal ruled that it had been paying too much ber 3 it had chartered two LNG carriers to carry
for Russian gas since 2014. And earlier this year, US gas. The vessels provided by Norway’s Knut-
Gazprom said it would seek a retroactive price sen will begin under PGNiG’s service in 2023,
change since 2017. coinciding with the launch of Venture Global
The two companies entered their current LNG's Calcasieu Pass LNG export terminal in
contract back in 1996, covering 10bn cubic Louisiana.
metres (bcm) of annual gas supply. The con- PGNiG is contracted to take some 1mn
tract, which is partially oil-indexed, includes a tonnes per year (tpy) of LNG from the Cal-
take-or-pay clause that means PGNiG must pay casieu Pass facility and a further 2.5mn tpy
for at least 8.7 bcm per year of gas even if it does from Venture Global’s Plaquemines terminal,
not take so much. although a final investment decision (FID) is
PGNiG is likely using the low cost of LNG as yet to be taken on the latter project. PGNiG's
justification for getting cheaper gas from Gaz- overall import portfolio for US gas comes to
prom. LNG prices were falling before the pan- 9.3 bcm per year
demic hit and have slumped to historic lows The Knutsen vessels can each carry some
since lockdowns were first imposed, although 174,000 cubic metres of LNG, or 100mn cubic
they are now beginning to recover. The cost of metres in gaseous form. PGNiG has chartered
gas in oil-indexed contracts has dropped much them for 10 years.
Week 44 04•November•2020 www. NEWSBASE .com P17
