PGNiG turns to tribunal over Gazprom price review
MOSCOW. Nov 7 (Interfax) - Poland's PGNiG has asked the Arbitration Tribunal in Stockholm to open proceedings with a view to changing the current price terms of gas supplied to Poland by Russia's Gazprom , the Polish company said in a statement.
PGNiG commenced negotiations on gas price reduction and change in the price terms with Gazprom Export over six months ago. A formal request was sent to LLC Gazprom Export in April 2011. "However, the talks with the Russian partner have not yielded results which would be acceptable to PGNiG. Therefore, like other European companies, PGNiG has decided to exercise its rights under the contract," the company said.
The subject matter of the proceedings is a change of the current price terms of gas supplies to Poland under the long-term gas supply contract of September 25, 1996, executed by PGNiG with Gazprom and Gazprom Export. As provided for in the contract, if the parties fail to reach an agreement within six months of the date of the formal commencement of price renegotiations, each party may refer the case to the Arbitration Court in Stockholm.
"The commencement of the arbitration proceedings does not mean the end of commercial negotiations. PGNiG hopes that it will be able to continue them with the Russian partner," the press release says.
A source at Gazprom Export told Interfax that the company had not yet received a formal notification about the commencement of the arbitration proceedings.
PGNiG said the proceedings would be conducted in accordance with the UNICITRAL Arbitration Rules. Under the procedure, the party submitting the case for arbitration must notify the other party of the arbitrator's name and the subject matter of the dispute by registered mail. Within 30 days of receipt of the notice, the other party should designate the other arbitrator. The arbitrators are to name the chair of the arbitration court within 30 days of their appointment. The arbitration court's resolutions are adopted by majority vote.
Steps aimed at reducing gas prices under long-term gas supply contracts have also been taken by other leading European companies. PGNiG said it hoped to reach an agreement enabling it to purchase gas at prices reflecting the conditions prevailing on the European gas market.
European Commission officers held spot checks at the offices of PGNiG and some other Gazprom subsidiaries and related companies in Central and Eastern Europe on September 27 over fears that companies breached rules to protect market competition and consumers.
Poland consumes around 13.7 billion cubic meters of gas per year, but only produces around 30% of this itself.
Following a lengthy process, and intervention by the EC, Russia and Poland signed documents on gas supplies in October 2010, stipulating that in 2010 Gazprom will supply Poland with 9.7 bcm of gas (of Russian or other origin), 10.5 bcm in 2011, and 11 bcm in 2012-2037. The prior protocol provided for 8 bcm per year until 2014 and 9 bcm thereafter.
Russia did not grant but promised Poland discounts for gas supplied in excess of contracted volumes.