Russian "Gazprom" advocated an increase in prices for Russian gas supplies to Poland under the current contract.

Such a proposal was put forward by PJSC Gazprom and LLC Gazprom export in response to the demand of the Polish company PGNiG to revise the price of fuel downward.

The requirements of Gazprom were reported to PGNiG.

The Polish side clarified that it does not agree with the position of the Russian supplier. 

"According to the company, Gazprom's request for negotiations, sent in response to the company's request for negotiations, is not justified and does not meet the formal requirements specified in the Yamal Contract, and, therefore, is not valid," Interfax ”statement of the Polish company.

Gazprom confirmed the information about the company's readiness to raise tariffs for Poland. 

“Acting in accordance with the terms of the contract, LLC Gazprom Export on November 9 sent to the Polish PGNiG a proposal to revise the price in the contract for the supply of gas from November 2020 towards its increase,” RIA Novosti quotes the position of the Russian energy company.

"Strange requirements"

Let us remind you that in early October, the Polish energy company PGNiG submitted an application for a reduction in the price of Russian gas supplied to the Polish market under the Yamal contract.

The Polish side stated that the terms of the agreement provide for the possibility for each party to the agreement to advocate for the revision of the terms of supply in accordance with the market situation once every three years. 

Russian natural gas is supplied to the Polish market under a long-term contract, which was signed back in 1996.

The agreement is valid until the end of 2022 and provides for the supply of up to 9.8 billion cubic meters of gas to Poland annually, but not less than 8.7 billion cubic meters.

  • PGNiG logo

  • globallookpress.com

  • © Jaap Arriens

Warsaw has demanded a price revision before.

In 2012, Gazprom and PGNiG entered into an additional agreement, according to which the price of Russian gas was reduced by 10%.

However, the Polish side was not satisfied with these conditions.

In 2016, PGNiG filed a lawsuit with the Stockholm Arbitration Court demanding to further reduce the price and bring it in line with the situation on the European gas market.

In 2018, the court issued an interim verdict on the claim, in which Warsaw was recognized the right to demand a revision of prices under the Yamal contract.

The final decision on the PGNiG claim was made in March 2020.

The arbitration tribunal acknowledged that the price of supplies from November 1, 2014 was overstated and ordered Gazprom to pay the Polish side compensation in the amount of $ 1.5 billion.

In response, Gazprom and Gazprom Export filed an appeal against this decision of the arbitration tribunal to the court of the Svea district (Sweden).

As Stanislav Mitrahovich, a leading expert of the National Energy Security Fund and the Financial University under the Russian government, noted in an interview with RT, the new demand from the Polish side to lower the price of Russian gas is unreasonable.

“Gazprom's prices are now quite competitive.

It is not yet clear how the price dispute between Gazprom and PGNiG will be resolved.

As a rule, if the parties cannot agree, then it comes to claims in the arbitration court.

The difficulty lies in the fact that Poland will have to prove that Gazprom's prices are too high.

Although now Russian gas is supplied at more competitive prices than exchange prices, ”the expert explained.

Alexey Grivach, Deputy Director General for Gas Issues of the National Energy Security Fund, shares a similar point of view.

“Poland makes strange demands, but it's in its style.

Warsaw uses any legal clues to start a dispute without thinking about how the situation will develop further, "the expert explained in a comment to RT.

Aleksey Grivach believes that the claims of the parties will result in another lengthy trial.

“The case will go to the arbitration court.

As for Gazprom's position, it can offer to raise the price on the grounds that Poland is now buying gas at a higher price from other suppliers, ”the expert added.

"Guide to American Interests"

Energy relations between Russia and Poland were clouded not only by disputes over the price of gas supplies under the 1996 contract.

In May 2020, the contract for the transit of Russian gas through Poland via the Yamal-Europe gas pipeline terminated.

Warsaw and Moscow did not renew the agreement signed by the parties back in the early 1990s.

Transit fuel supplies continued, but now the cost of transit is determined based on the results of auctions. 

In parallel with the price litigation, Warsaw launched a campaign to combat the Russian-German gas transmission project "Nord Stream 2".

  • Gas compressor station on the Yamal-Europe gas pipeline section

  • RIA News

  • © Ivan Rudnev

In October 2020, the Polish Office for the Protection of Competition and Consumers (UOKiK) decided to fine Gazprom by € 6.467 billion, and the Russian company's European partners in the project - by € 52.2 million.

In the opinion of the Polish side, the companies had no right to conclude an agreement on financing the construction of the second branch of the Nord Stream without the consent of Warsaw.

UOKiK believes that by such actions the project participants strengthened their monopoly on the European gas market and violated the "principles of fair competition."

Warsaw also demanded that Gazprom's partners terminate the project financing agreement.

Gazprom said that the decision of the Polish antimonopoly regulator “violates the principle of legality” and promised to challenge it.

In early November, the Russian company filed an appeal against the decision of the Polish antimonopoly authority to the Polish court for the protection of competition and consumers.

Gazprom's European partners are also challenging the decision of the Polish regulator.

Shell, OMV, Uniper, Engie and Wintershall Dea filed complaints in early November. 

According to Stanislav Mitrakhovich, Gazprom will not have to pay for this decision of the Polish antimonopoly authority, since Poland is unlikely to be able to present evidence of its case in court.

“In addition, Poland does not suffer in any way from the construction of Nord Stream 2, because the Russian gas pipeline does not interfere with the transit of gas through its territory,” the expert added.

As Aleksey Grivach noted, Warsaw is not so much concerned with the issues of antimonopoly policy as it is interested in the possibility of creating problems for Gazprom.

"Poland acts this way because it acts as a conductor of American interests in Europe, because it is the United States that intends to compete with Russian gas in the European market," the expert explained.

According to the Ukrainian scenario

In November 2019, Warsaw announced it would stop imports of Russian natural gas after the current contract expires in 2022.

“Over the past four years, PGNiG has taken fundamental steps to diversify natural gas supplies to Poland,” the Polish energy company said in a statement.

PGNiG reported that to replace Russian supplies, the company entered into long-term contracts for the supply of liquefied natural gas (LNG), and also acquired gas fields on the Norwegian continental shelf.

To supply gas from Norway, Poland is building a new offshore gas pipeline Baltic Pipe with a throughput capacity of about 10 billion cubic meters.

In May this year, the project received the last approval - Sweden allowed to lay the highway through its exclusive economic zone.

Previously, a similar permit was issued by the Danish authorities.

  • "Nord Stream-2"

  • © nord-stream2.com

In October 2020, the Polish gas transmission company Gaz-Sistem identified contractors for laying the onshore section of the gas pipeline.

Poland's PGNiG signed a long-term contract for the supply of American LNG in 2018.

Under the terms of the agreement, the American Cheniere Marketing International LLP will supply 0.52 million tons of LNG to Poland from 2019 to 2022, which, after regasification, will give 0.7 billion cubic meters of gas.

In the period from 2023 to 2042, the volume of supplies will increase to 1.45 million tons of LNG per year.

In addition, LNG supply contracts were signed with Ventures Global LNG and Sempra Energy.

Poland also buys liquefied natural gas from Qatar's Qatargas.

According to experts, now Poland is following the example of Ukraine, which earlier also refused to directly import Russian gas.

“By refusing to buy gas from Gazprom, Warsaw will gain nothing.

On the contrary, the cost of gas for Polish consumers could rise.

Norway cannot significantly increase the volume of fuel supplies, so if Norwegian gas goes to Poland, Germany will have to buy the same volumes, ”Stanislav Mitrakhovich summed up.