PGNiG: The issuance by the Arbitral Tribunal in Stockholm

The management board of Polskie Górnictwo Naftowe i Gazownictwo S.A. (“PGNiG” or the “Company”) announces that on 30 March, 2020 it learned that on 30 March, 2020 the Arbitral Tribunal in Stockholm (the “Arbitral Tribunal”) issued a final award in the arbitration proceedings brought by PGNiG against Gazprom PJSC and Gazprom Export LLC (jointly referred to as “Gazprom”) regarding the revision of the contract price for gas supplied by Gazprom under a contract for the sale of natural gas to the Republic of Poland of 25 September 1996 (the “Yamal Contract”). Information about said proceedings was disclosed by the Company in current reports No. 43/2015 dated 13 May 2015, No. 37/2018 dated 30 June 2018 and No. 59/2019 dated 13 December 2019.
Under the final award, the Arbitral Tribunal revised the price formula for the purchase of gas supplied by Gazprom under the Yamal Contract, inter alia, through its material and direct connection with the market price of natural gas on the European energy market. For PGNiG, a change of the price formula results in a substantial improvement of terms of its commercial activity thanks to greater compatibility between indexation of the price that impact the cost of sourcing imported gas, and the market gas sale pricing policy.
According to the provisions of the Yamal Contract and the final award, the new contract price determined by the Arbitral Tribunal should apply retroactively from 1 November 2014, i.e., from the date of the submission by PGNiG of its price revision request.
According to the Company’s preliminarily assessment, the retroactive settlement under the final award of the Arbitral Tribunal results in a price difference payable by Gazprom to PGNiG of approximately USD 1.5 billion for the period from November 1, 2014 to February 29, 2020.
PGNiG is taking steps to have the award implemented as well as to get a return of the abovementioned amount and is in the process of analysing how to present the consequences of the award in its financial statements.
The Company notes that the contract price for the gas supplied by Gazprom under the Yamal Contract might be changed in the future, effectively as of 1 November 2017, as a consequence of the Company’s request for the revision of the contract price which the Company referenced in the current report No. 91/2017 of 1 November 2017. The Company also notes that the contract price might be changed in the future as a consequence of Gazprom’s request for the revision of the contract price which the Company referenced in the current report No. 96/2017 of 8 December 2017.