Poland's state-controlled gas firm PGNiG SA (PGN.WA) may launch arbitration proceedings against Russia's OAO Gazprom (GAZP.RS) if by the end of October the Russian firm doesn't agree to cut its prices for natural gas, a PGNiG executive said Wednesday, according to state-owned newswire PAP.
Poland's state-controlled gas firm PGNiG SA (PGN.WA) may launch
arbitration proceedings against Russia's OAO Gazprom (GAZP.RS) if by the end of
October the Russian firm doesn't agree to cut its prices for natural gas, a
PGNiG executive said Wednesday, according to state-owned newswire PAP.
"If we don't get a breakthrough in talks with Gazprom until the end of the
month, we will be seeking justice together with others," PAP quoted the
company's vice-president, Radoslaw Dudzinski, as saying, adding that E.ON
Ruhrgas AG and RWE AG (RWE.XE) are among companies seeking to join the
arbitration process.
"We are convinced there are reasons for cutting gas prices even now,
during the winter season. The market price for gas is significantly lower than
the price in the contract" between PGNiG and Gazprom, Dudzinski added.
Poland
relies heavily on
Russia
to
cover its gas needs, importing about two-thirds of its annual gas consumption
from Gazprom. Because of that dependence and its inability to import gas from
other directions,
Poland
pays
what it sees as excessive prices for Russian gas.
The state-controlled Russian supplier uses a price formula indexed to the price
of crude oil, but prices for oil and gas on international markets have recently
diverged as demand drops in
Europe
and
gas from new, unconventional sources like shale gas finds its way onto the
market.
Poland
has
in recent years taken several initiatives to reduce its reliance on Gazprom. It
is building pipelines connecting it with gas networks in
Germany
and
the
Czech
Republic
. It's
building a liquefied natural gas terminal on the Baltic coast to be able to
import gas from areas outside
Russia
.
Poland also hopes to begin commercial production of natural gas trapped deep
underground in shale rock, with the U.S. Department of Energy estimating its
shale gas deposits at 5.3 trillion cubic meters, or more than three centuries
of Poland's annual consumption.
Poland
's
domestically produced shale gas should be competitively priced compared with
gas imported from
Russia
, the
country's deputy treasury minister, Mikolaj Budzanowski, said last month.
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