Polish energy firm PGNiG receives $1.6 billion compensation from Russian gas giant Gazprom

July 2, 2020

Polish energy firm PGNiG confirmed that following the court ruling issued in March, the company has already received a compensation payment of USD 1.6 bln from Gazprom. Russia decided to settle the payment but also appealed against the decision of the Stockholm arbitration court.


In March, PGNiG won in arbitration its dispute with Gazprom over the price of long-term gas supply. It was an important decision which had notably changed the energy markets in Central and Eastern Europe. The decision meant that Poland is not only paying less for gas but also was able to prevent the use of resources as a political weapon. Additionally, the Arbitration Tribunal changed the price formula for the purchase of gas supplied by Gazprom under the Yamal Contract. The new, lower price is directly linked to the European energy market quotations for natural gas.

The main argument presented by PGNiG in court stated that the price scheme varied across the countries and Poland was paying much more than the other clients in Western Europe.

PGNiG initially calculated that Gazprom should pay back around  $ 1.5 billion price difference.

The new contract price, as introduced by the Arbitration Tribunal in its final judgment applied to gas supplies that took place from November 1, 2014, this is from the date when PGNiG had submitted a request for renegotiation of the contract price.

Poland argued that it had fallen victim to political blackmail. First, when Gazprom disrupted energy supplies or reduced the amount of gas delivered to Eastern European countries. Second, the disputed prices were significantly higher than the prices available to other European countries. The Stockholm arbitration court ruling helped to limit the unfair market practices.

It is worth mentioning that regardless of the court decision, Poland had anyway decided to reduce its reliance on gas supplies from Russia. Therefore, the country will not extend its contract with Gazprom which expires in 2022. PGNiG is now buying liquefied natural gas (LNG) from the USA and other countries. Poland and Croatia built the LNG terminals and through the direct supplies via terminals are slowly replacing the supplies from Russia. Poland diversifies its gas deliveries also by building a gas pipeline to Norway. The Baltic Pipe, as the project is called, will open up a new way to access gas from the North Sea.

Author: Alicja Prochniak

Picture: Twitter @GK_PGNiG







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