Poland, Russia to Renew Gas Supply Talks in 10 Days

Sept. 24 (Bloomberg) -- Poland and Russia will hold the next round of talks on a new gas supply contract in 7 to 10 days as they seek to address European Union concerns about pricing, pipeline management and fuel re-exports.



Both countries want to increase supplies and are showing a strong commitment, Philip Lowe, an EU official participating in the negotiations, said today in an interview in Moscow. Today's talks in Moscow lasted 4 1/2 hours, he said.



"There is sufficient degree of urgency among all those concerned to make it happen," Lowe said. "There is a recognition of the need to make sure these arrangements make sense legally and make sense commercially."



Polskie Gornictwo Naftowe i Gazownictwo SA, Poland's dominant gas company, said Sept. 20 it may not have adequate supplies starting next month if the two governments don't reach a new agreement, allowing it to sign a final contract with OAO Gazprom, Russia's export monopoly.



Poland's Economy Ministry said the countries moved "significantly closer" to an agreement and the EU accepted the conclusions of the meeting. Final talks will be held early next month, the ministry said in an e-mail from Warsaw.



Competitive Gas Markets



Poland, which gets about two-thirds of its gas from Russia, reached a preliminary agreement with Gazprom in January. The contract wasn't signed after the European Commission said it was assessing whether the deal complies with EU law.



"We in the EU want the conditions to be in line with the new legislation on creating and opening competitive markets of gas," Lowe said. The EU, which is acting as a legal adviser between the two countries, is examining tariffs, pipeline management and re-export of gas, he said.



The EU is seeking a balance between new regulations requiring independent management of pipelines and the existing long-term contracts, Lowe said.



"There is very hard work going on and these issues have been extensively discussed," Lowe said.



The new deal will raise annual deliveries of natural gas to Poland to as much as 10.2 billion cubic meters from about 7.4 billion, and extends the previous contract by 15 years to 2037.



The increase will cover a supply gap after the country stopped receiving gas from an intermediary last year and will help secure supply from the Yamal pipeline running from Russia to Germany.



Raising Gas Supplies



Poland has been seeking to raise gas supplies since early last year, when trader RosUkrEnergo AG, 50 percent-owned by Gazprom, halted deliveries following a dispute between Russia and Ukraine. RosUkrEnergo was supposed to deliver 2.3 billion cubic meters of gas to Poland in 2009 under a contract that ran out on Dec. 31.



Under the new agreement, Gazprom will keep using Yamal through 2045. Gazprom and PGNiG manage the Polish section of the Yamal pipeline through their EuRoPolGaz SA joint venture.



Poland may seek to increase delivery volumes without extending the contract's duration from 2022, as was earlier planned, Polish Economy Minister Waldemar Pawlak said in Warsaw yesterday.




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