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Gazprom ordered to pay Poland's PGNiG US$1.5bn over gas deal terms

Poland’s state-owned oil and gas company PGNiG has won  an international arbitration against Gazprom over a reduction in the price of its long-term Yamal gas supply contract. The arbitration court of the Stockholm Chamber of Commerce ruled that Gazprom must reimburse to PGNiG approximately US$1.5bn for the period from 1 November 2014 to 29 February 2020. In addition, the gas pricing formula in the contract between the two parties should be amended to consider natural gas market quotations, as PGNiG is paying more for Russian gas than its European peers.

PGNiG has been diversifying its gas supply in recent years, most notably with the signature of long-term supply agreements with US LNG producers. In 2019, LNG imports (most of which from Qatar, Norway and the United States) rose by 27% (+0.7 bcm, from 2.7 bcm in 2018 to 3.4 bcm in 2019), accounting for 23% of total gas imports. Meanwhile, Russian gas imports remained stable at around 9 bcm in 2019. Consequently, the share of gas imports from Russia in the total Polish import volumes dropped to 60% in 2019 from 67% in 2018. In November 2019, PGNiG announced that it would end its 9 bcm/year gas supply contract with Gazprom. According to Yamal contract’s term, which was concluded in 1996, the parties are required to submit a declaration three years before its termination date whether they intend to continue the deal.