No. 37/2025 | 02-07-2025 | 16:56
Partial Award in arbitration proceedings
ORLEN S.A. (the “Company”) informs that on 2 July 2025 it received information that on 1 July 2025 an ad hoc Arbitral Tribunal in Stockholm issued a partial award (the “Partial Award”) in arbitration proceedings started on 14 January 2022 and brought by the companies PAO Gazprom and OOO Gazprom export (“Gazprom”), which concerned, among other things, a change in the contract price for gas delivered to PGNiG S.A. (currently ORLEN) since November 2017 on the basis of a sale contract for natural gas to the Republic of Poland dated 25 September 1996 (the “Yamal Contact”).
On the basis of the Partial Award, the Arbitral Tribunal:
- dismissed ORLEN’s claim to reduce the contract price from November 2017 or from January 2018;
- dismissed Gazprom’s claim to increase the contract price from November 2017;
- established a new, higher contract price on 1 January 2018; and
- dismissed all further Gazprom claims to increase the contract price effective on 1 January 2018.
The issuing of the Partial Award by the Arbitral Tribunal is a stage in multilayered arbitration proceedings. In subsequent stages of the arbitration proceedings, the following will be resolved:
- claims of the parties to change the price conditions of the Yamal Contract from 2020 and 2021; and
- disputes and claims related to causes and consequences of the withholding of supplies by Gazprom in April 2022.
The Partial Award modifies the price conditions of the Yamal Contract for the period from January 2018 to January 2021 (i.e. until the earliest potential date of the next amendment of the price under the price review claims from 2020/2021 indicated above).
The Arbitral Tribunal did not decide on the amounts or the manner of settlement between the parties resulting from retroactive implementation of the contract price formula, and it leaves the decision in that area to the parties of the dispute. In the Company’s preliminary assessment, the retroactive settlement resulting from the Partial Award in the period between January 2018 and January 2021 results in a difference to be paid by ORLEN of approximately USD 290 million. At the same time, admission of Gazprom’s claim initially submitted as part of the arbitral proceedings would result in a difference to be paid by ORLEN of approximately USD 1.7 billion.
The Company is analysing the content of the Partial Award as well as the manner of reflecting the financial effects of the Partial Award in ORLEN’s financial results and intends to continue actions to protect the Company’s interest in subsequent stages of the arbitral proceedings with Gazprom.
See also regulatory announcements published by PGNiG S.A. (currently ORLEN S.A.):
- No. 91/2017 of 1 November 2017;
- No. 96/2017 of 8 December 2017;
- No. 13/2020 of 30 March 2020;
- No. 57/2020 of 1 November 2020;
- No. 58/2020 of 9 November 2020;
- No. 43/2021 of 28 October 2021;
- No. 2/2022 of 14 January 2022;
- No. 7/2022 of 11 February 2022;
- No. 27/2022 of 26 April 2022.