November 09, 2012
Weil's International Arbitration team successfully resolved a very significant dispute over natural gas prices between longstanding client Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) and Gazprom on November 5, 2012. The dispute was scheduled to go to arbitration in Stockholm in January 2013.
PGNiG, Poland's largest natural gas supplier, served notice in April 2011 to revise the price of the gas it buys under its 27-year gas supply contract with Gazprom, which currently has ten years to run. Negotiations were unsuccessful and arbitration proceedings were commenced in October 2011 seeking revision to the pricing formula with retrospective effect as from the date the notice was served, namely for 12 years to the end of the contract.
Besides averting the arbitration, the settlement agreement is expected to achieve savings for PGNiG of approximately $0.75 billion for each year the revised formula is effective. The settlement also brings natural gas prices in Poland in line with prices in other Western European countries.
There has been a noticeable increase in arbitrations involving emerging markets over the past years. The significance and international nature of this case also highlights the strength and abilities of Weil’s global International Arbitration group and further reinforces our position as a leading international arbitration firm.