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Natural gas supplies halted under Yamal contract

Published by , Editorial Assistant
LNG Industry,

PGNiG S.A has announced that Gazprom has halted all natural gas supplies under the Yamal contract. The development has no impact on current deliveries to PGNiG’s customers, who are receiving the fuel according to their demand.

Although PGNiG has duly met all its obligations under the Yamal contract, on 27 April 2022 Gazprom halted natural gas supplies it is obliged to deliver according to the contract and PGNiG’s nominations.

PGNiG considers the halt of natural gas supplies a breach of the Yamal contract. PGNiG reserves the right to raise claims in connection with the halt and will use all of its contractual rights and rights under applicable provisions of law.

According to a notification received by PGNiG from Gazprom, gas supplies have been halted by Gazprom in connection with decree of the President of the Russian Federation No. 172 of 31 March 2022 on the special procedure for the fulfilment by foreign buyers of obligations to Russian natural gas suppliers.

The decree has led to attempts to make it mandatory for some of Gazprom’s customers to hold settlement accounts in a bank under the jurisdiction of the Russian Federation and to make final payments for gas in Russian roubles. Following a thorough analysis of the decree, the PGNiG’s management board rejected this payment arrangement as being in contradiction with the Yamal contract and decided to make payments as provided for in the contract.

Despite the supply halt by Gazprom, deliveries to PGNiG’s customers are being made according to their demand.

The progressive diversification of gas supply sources and directions conducted by PGNiG and GAZ-SYSTEM gives PGNiG multiple options to use additional sources of supply to Poland. The company can source gas from the EU via interconnectors with Germany and the Czech Republic, and from the global LNG market via the terminal in Swinoujscie, whose regasification capacity has been increased this year. An important source of supply is indigenous production, with an additional safeguard being natural gas stocks held in underground gas storage facilities in Poland, which are currently injected and are approximately 80% full.

PGNiG is in constant contact with OGP GAZ-SYSTEM S.A and both companies are monitoring the situation and will keep the market informed.

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