Polish state-controlled gas monopolist PGNiG was dealt two blows to its aim of improving its weakened financial position last week, first from the Russian government and then from the local regulator.
Russian President Vladimir Putin signed a decree last Tuesday declaring that “strategic Russian companies” – such as Gazprom – must first receive permission from the Kremlin before changing pricing contracts or disclosing information.
It is suggested Mr Putin signed the decree to shield Gazprom from a recently launched EU investigation into whether the Russian company is abusing its position as dominant gas supplier to the EU. The decree puts significant political weight behind Gazprom’s position and makes it less likely the Russian firm will be forced to make its prices more competitive, an analyst who asked not to be named told WBJ.
PGNiG has filed an arbitration claim in order to secure price cuts on natural gas it imports from Gazprom under a long-term contract. The Polish company sources most of its gas from Russia but says the prices it is charged are unfairly high.
PGNiG recorded a net loss of zł.314 million in the second quarter of 2012, seeing its margin on gas sales drop to -13 percent as the US dollar strengthened against the złoty during the period. PGNiG pays Gazprom in dollars.
“Putin’s statement will significantly reduce the chances of PGNiG and Gazprom reaching an out-of-court settlement,” said Peter Csaszar, an analyst at KBC Securities.
To improve PGNiG’s bargaining position, Treasury Minister Mikołaj Budzanowski said that the company should seek to double its natural gas production by 2019, the year when PGNiG is due to start renegotiating its next long-term gas supply contract with Gazprom.
Polish energy market regulator URE did little to help beleaguered PGNiG last week, rejecting a request from the gas firm to increase the price it charges Polish customers.
From Warsaw Business Journal by Gareth Price
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