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Annex to Yamal contract executed by Polish PGNiG

Annex to Yamal contract executed by Polish PGNiG

Warsaw, June 17 - Neftegaz.RU. The annex signed between PGNiG and Gazprom confirms the application of a new pricing formula, as set out in the arbitral award. The parties also agreed that by July 1st 2020 Gazprom would transfer approximately $1.5 billion into PGNiG’s account to refund the overpayments for gas supplied in 2014-2020. 

Jacek Sasin, Deputy PM and Minister of State Assets stressed that the relations between Poland and Gazprom look quite different from what they did only 5 years ago. Thanks to the consistent policy approach, they are now based primarily on a business partnership.

The annex to the Yamal contract was executed on June 5th 2020 in electronic form and then, by June 15th 2020, its original counterparts were signed and exchanged. It specifies how the pricing formula set out in the Arbitration Institute of the Stockholm Chamber of Commerce’s award will be applied in practice and how the financial consequences of its application to past gas supplies will be settled between the parties.

“The annex transposes into our contract with Gazprom the award issued by the arbitration tribunal in Stockholm on March 30th this year. It revised the pricing formula to pay for gas purchased from our Russian partner. We are happy to have smoothly reached an agreement to settle the issue and that we can have a normal business dialogue,” said Jerzy Kwieciński, CEO of PGNiG.

The new pricing formula, as set out in the arbitral award, is linked largely to gas prices quoted on Western European markets. As a result, since March this year PGNiG has paid a lower price for gas imported into Poland from across its Eastern border. 

However, the new pricing terms set out in the award are effective as of November 2014, i.e. the date on which PGNiG requested Gazprom to revise the pricing formula. The arbitral award allowed PGNiG to take steps to recover the amounts overpaid for gas supplied from 2014 to 2020 at prices determined based on the previous formula, which was challenged by the Stockholm tribunal.

“When signing the annex, we agreed that the overpaid amount, estimated at some $1.5 billion, would be transferred into PGNiG’s account by July 1st 2020,” said Kwieciński. He added that the amount overpaid from November 2014 to the end of February 2020 shows how unfavourable the Yamal contract actually was to PGNiG.