The Stockholm arbitration ruled in Poland's favor in a five-year dispute with Gazprom over the price of gas, reported Polish state-owned oil and gas company PGNiG.
"The Court of Arbitration considered PGNiG's arguments and confirmed that the gas price under the Yamal contract was non-market and overstated," PGNiG said.
Now the Polish company will pay Gazprom for fuel under a new price calculation formula, "which is directly linked to gas prices in the Western European market.
"The court's decision will affect deliveries from November 1, 2014, that is, from the day when PGNiG applied for a review of the contract price,“ the company said in a statement.
According to PGNiG, Gazprom will be obliged to pay back about $1.5 billion, which is, "the difference between the price calculated under the new formula and the amount actually paid by PGNiG from November 1, 2014 to February 29, 2020."
The press service of Gazprom Export confirmed that the Russian gas giant was informed about the decision of the Stockholm arbitration. "We are currently studying this decision. It is too early to give any estimates of the amount of possible payments," Gazprom said.
In 2012, PGNiG and Gazprom agreed to reduce the price of long-term gas supplies by 15%, allowing the Polish company to save about $940 million a year. Four years later, the Polish company sued Gazprom and Gazprom Expor again, demanding a reduction in the price of gas, and the Stockholm arbitration upheld Warsaw's demands.
According to the court, Gazprom has been refusing to change the price for a long time, and as a result, the gas supplied from Yamal was much more expensive than fuel in European markets. PGNiG said at the time that they expected the Russian company to reduce its price to market value, but Gazprom interpreted the arbitration decision differently. According to Gazprom, the court refused to reduce the price of gas, recognizing only the potential right to demand discounts.
Poland has begun to reduce its dependence on the Russian supplier. In 2017, the share of Russian gas in Poland’s market was 77%. The following year, Warsaw increased alternative gas imports by 60%, reducing its dependence on fuel from Russia by 2%. And from December 2022, Poland will stop purchasing natural gas from Russia under the Yamal contract.