Russian natural gas price to Poland cut by more than 10% – minister

07 November 2012 16:14 Source:ICIS

The price reduction achieved by Polish incumbent PGNiG for its long-term natural gas contract with Russia's Gazprom was more than 10% and was the largest such cut achieved by any European company, Polish treasury minister Michał Budzanowski said in an interview with TVN CNBC on Tuesday.

Budzanowski would not be pushed to comment on whether the reduction had been as much as 15%, however.

But the treasury minister did say he had wanted to achieve a gas price for Poland that was comparable with the price paid by German importers of Russian gas. He said the gas price being paid by Poland prior to the latest agreement had been around $570/thousand cubic metres (Km³), and now the new agreement reduced this to less than $500/Km³.

The price agreement was retroactive to cover 2012 and would result in a cash repayment from Gazprom to cover excess payment for gas this year.

The arbitration proceedings instigated against Gazprom by the Polish side in February had helped in reaching the latest price agreement, according to Budzanowski.

He added that instead of paying zlotych (Zl) 15bn (€3.6bn) for its total Russian gas imports this year, Poland would be paying Zl12bn.

The new Russian price agreement meant there would be finance to cover the company's losses and also to increase investment, particularly in domestic gas production.

Budzanowski said the lower Russian gas price together with any increase in Polish domestic gas extraction would improve the economics of chemical production and the building of gas-fired power plants in Poland.

Four gas-fired power stations were definitely to be built, according to the minister. One in Stalowa Wola is already under way with plans in place for units in Blachowna, Włocławek and Puławy.

PGNiG on Wednesday confirmed that because of the new gas price achieved earlier in the week, it would be applying to energy regulator URE for a reduction to its retail tariffs. ES

By Elizabeth Stonor