Nov 10 - PGNiG SA Signs an Annex to the Yamal Contract for Natural Gas Supplies

Source Company Web Site
Company PGNiG SA 
Tags LNG & Gas Storage/Processing
Date November 02, 2010

In Warsaw, on October 29th 2010, Polskie Górnictwo Naftowe i Gazownictwo SA and Gazprom Export signed an annex to the Yamal Contract of September 25th 1996 between PGNiG SA and OAO Gazprom/OOO Gazprom Export.  

The execution of the Annex was connected with the approval on October 29th 2010 of the relevant amendments to the agreement between the governments of the Republic of Poland and the Russian Federation concerning construction of a gas pipeline system for transmission of the Russian gas across the territory of Poland, dated August 25th 1993, as amended. The annex is also an effect of the adoption, on November 3rd 2009, of the so-called package of arrangements laid down in the Joint Statement by Gazprom and PGNiG Concerning Cooperation in the Area of Natural Gas. 

Following the expiry on January 1st 2010 of the contract providing for the supply of 2.3bn cubic meters of natural gas per annum, executed in 2006 between PGNiG SA and RosUkrEnergo, the annex signed today will allow  PGNiG SA to purchase the following quantities of natural gas directly from the producer: 9.03bn m3 according to the Polish standard (i.e. 9.7bn m3 according to GOST) in 2010, 9.77bn m3 according to the Polish standard (i.e. 10.5bn m3 according to GOST) in 2011, and 10.24bn m3 according to the Polish standard (i.e. 11.0bn m3 according to GOST) from 2012 to 2022 roku.  

Moreover, the annex lifts the ban on re-export of natural gas to third-party countries without Gazprom Export's consent (non re-export clause). The annex also introduces a preference price (relative to the applicable contract price) in the period 2010-2014 for the quantities of natural gas received in a given year above the Minimum Annual Quantities. The discount mechanism represents trade secret. The application of the granted discounts is expected to produce savings of USD 200m-250m. 

Taking into account the current prices of petroleum products, the average annual value of the contract for Russian gas supplies is estimated at approx. PLN 8.5bn.  

Other terms and conditions of the Contract, including the pricing formula for gas fuel, will remain unchanged.

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