27.04.2022 Halt of natural gas supplies under the Yamal contract

Polskie Górnictwo Naftowe i Gazownictwo SA announces 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 April 27th 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 March 31st 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 European Union via interconnectors with Germany and the Czech Republic, and from the global LNG market via the terminal in Świnoujście, 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 SA and both companies are are monitoring the situation and will keep the market informed.

26.04.2022 PGNiG and GAZ-SYSTEM: information on gas supplies under Yamal contract

PGNiG has received a letter from Gazprom announcing a complete halt of supplies under the Yamal contract. PGNiG and GAZ-SYSTEM announce that at present all supplies to customers are being made in accordance with their demand. The companies are monitoring the situation and are prepared for different scenarios.

On April 26th, Gazprom notified PGNiG of its intention to completely stop supplying gas under the Yamal contract as of the beginning of the contract day on April 27th.

GAZ-SYSTEM and PGNiG keep in regular contact with each other and are monitoring the situation relating to the stoppage of supply by Gazprom on an ongoing basis.

At present, the transmission infrastructure managed by GAZ-SYSTEM is operating without any disruption. The Polish transmission system is supplied on an ongoing basis, also via other points of entry to the gas system, gas is being injected into the underground storage facilities, and fuel is being transmitted to customers according to their current demand.

Thanks to the implementation of the government’s strategy to diversify gas supply sources, PGNiG is prepared to acquire gas from various directions, e.g., through gas interconnections on the western and southern borders and the LNG Terminal in Świnoujście, which is gradually increasing the number of LNG carriers it can receive. Poland also has its domestic gas production as well as gas stocks stored in underground facilities. Currently, the storage facilities are around 80% full, which is significantly above the level recorded in the same period in previous years.

PGNiG and GAZ-SYSTEM are monitoring the situation and will keep the market informed.

Polskie Górnictwo Naftowe i Gazownictwo SA, press release