Russian gas major OAO Gazprom (GAZP.RS) will increase gas supplies to Poland to 11 billion cubic meters of gas, from 7 bcm last year, a person familiar with the matter said Friday.
Earlier Friday, Polish gas monopoly PGNiG (PGN.WA) said it reached an agreement with Gazprom to increase natural gas supplies to Poland.
The agreement includes the extension of an existing gas supply contract until 2037, and involves the operations of EuRoPol Gaz, the operator of the Polish section of the Yamal-Europe gas pipeline, and the tariff policy for EuRoPol Gaz.
Since early this year, Poland has been trying to reach an agreement with Russia on additional gas supplies as of 2010.
As a result of the Russian-Ukrainian gas conflict in the beginning of the year, Gazprom-linked gas trader RosUkrEnergo, which over the past years supplied Poland with over 2 billion cubic meters of natural gas a year, lost access to its gas sources and stopped delivering to Poland via Ukraine.
Poland currently consumes some 14 bcm of gas annually and projects that its demand will increase to some 18 bcm by 2015 driven chiefly by increased use of gas for electricity generation.
In September, Russia conditioned a deal on increased supplies on simplifying the ownership structure of EuRoPol Gaz to eliminate a gas trader with a minority stake in the company.
At present, PGNiG and Gazprom each hold 48% of shares in the pipeline operator. The remaining 4% is in the hands of Gas-Trading, an unlisted company held by PGNiG, Gazprom and Bartimpex.
The final sticky issue in negotiations was Russia's push for a lowering of the transit fees Gazprom has to pay for sending its gas via Poland to Western Europe.
For Poland, the issue was also vital, given that the transit fees are the main source of income for EuRoPol Gaz, which in turn pays dividends from profits to PGNiG.
"We've reached a compromise, the Russian side has pledged that EuRoPol Gaz will remain profitable," the source said.
The agreement between PGNiG and Gazprom will become binding once relevant documents are signed by the governments of Poland and Russia.