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05-10-2010 16:03

Russia-Poland gas deal still out of reach

Poland and Russia were once again unable to agree on amendments to a gas contract in late September. Meanwhile, fear grew that the final round of talks, scheduled for only 20 days before Russia halts its gas deliveries to Poland at the end of October, will not be enough to see the two parties come up with a deal.

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Polish Deputy Prime Minister Waldemar Pawlak has suggested that a major sticking point in the talks was Russian reluctance to budge on its pricing, due to worries that the deal could set a precedent on the whole 140 billion cubic meters of gas it pumps into Europe every year.

"The last talks were constructive, we made certain amendments to the initialed agreements. ... If the Polish side endorses the documents, they will be signed in October and Poland will receive as much gas as it needs," Gazprom's Deputy CEO Alexander Medvedev told reporters.

Mr Pawlak was less optimistic. "It's impossible to say whether the next round will be the last. The situation is complicated by the European Union's involvement," he said.

The agreement, which would see gas deliveries to Poland increase, was drawn up last year but not signed after the EU accused Poland of preventing its neighbors from purchasing its supplies of surplus Russian gas, thereby violating EU competition law. Now the challenge is to find a solution acceptable to all three parties.

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Without the extra gas, Poland may not have enough gas to satisfy demand when Gazprom's deliveries stop on October 20, Poland's gas monopoly Polskie Gornictwo Naftowe i Gazownictwo (PGNiG)
has warned.

Under the current contract, Gazprom is obliged to deliver 7.45 billion cubic meters of gas to Poland every year. The new contract between PGNiG and Gazprom, once signed, would see 9.0 billion cubic meters arrive and as much as 10.2 billion entering Poland in the future.

The contract was originally negotiated due to delivery shortfalls which arose when RosUkrEnergo, in which Gazprom has a 50 percent stake, halted deliveries to Poland following a dispute between Russia and Ukraine.

Andrew Shale

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