Poland set to talk on new Russia gas supply deal

01 September 2008 17:25 [Source: ICIS news]

PRAGUE (ICIS news)--Poland's many fertiliser firms will be among those looking on anxiously as their government attempts to renegotiate a reasonable price with Russia for long-term gas supplies, ING analysts said on Monday.

Polish gas monopoly PGNiG's contract with Russia's Gazprom-owned RosUkrEnergo expires at the end of next year and Warsaw, aware that Moscow has been antagonised by Poland's agreement to allow America to build a missile shield base on its territory, are readying for difficult negotiations.

“PGNiG sources two thirds of its gas supplies from Russia at the moment, and, unlike with oil, there are currently no alternatives, so obtaining a deal is very important,” said ING analyst Tamas Pletser.

“Given the lack of alternatives, the burgeoning power is with the suppliers. This is not a buyer's market, it's a seller's market,” he added.

Russia supplies nearly half of Poland's gas and 95% of its oil. Given the difficult relations between Poland and Russia, Polish oil and petrochemicals group PKN Orlen has prioritised its search for non-Russian crude sources.

The Polish government has recently opted to go ahead with a planned liquefied natural gas (LNG) terminal on the Baltic coast to try and diversify the country's range of gas deliveries away from Russian supplies.

The current gas deal with RosUrkEnergo was struck in 2006 following an agreement for a 10% price hike.

Poland's major nitrogen fertiliser firms include Anwil, Zaklady Azotowe Pulawy (ZAP), Zaklady Chemiczne Police (ZchP) and Zaklady Azotowe Kedzierzyn (ZAK).

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By: Will Conroy
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