Poland’s PGNiG won’t call for natural gas tariff cut in early 2019

Polish state-controlled gas giant PGNIG’s vice president Maciej Wozniak said that the company would not motion energy regulator (URE) to lower household natural gas tariffs in 2019, but it was still working out details of its desired tariff changes, suggesting the company will call for a hike, according to comments cited by Business Insider Polska. PGNiG was in talks with the URE, he said. The company will strive as well as it can to leave consumers in the most comfortable situation possible, he said. PGNiG will not run out of gas this winter, Wozniak also said.

Overall, natural gas prices were hiked by 3.6% on Aug 10. That helped push up m/m gas price by 2.0% m/m in Aug and another 0.8% in Sep. This tariff was to hold in place to end-2018, meaning there will be a new tariff for 2019. The URE must take into account PGNiG’s costs and an acceptable margin, among others, when decided on tariffs. Usually, the gas tariff follows the path of global oil and gas prices. The latest global oil price declines probably mean less upside pressure here than might have seemed likely a month or so ago. The picture is complicated by gas supply diversification, with LNG prices through the Świnoujście terminal supposedly cheaper. Poland has lowered Gazprom’s share of imports to some 70% (Q3 2018) from 90% before, with the share of LNG rising to some 20%. That share will rise further in the coming years.

One other consideration is that Gazprom lost an arbitration case against Poland in late June and is supposed to offer Poland the chance to renegotiate its prices down. In early October, Gazprom challenged the Swedish court’s decision. PGNiG said at the time that it is confident the challenge is groundless and will not hold up. PGNiG said the long-term price agreed with Gazprom is not aligned with the market price.

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