Gazprom settles gas price conflict with PGNiG

This is an important step to restoring the competitiveness of PGNiG's long-term contracts, Gazprom's head of export Alexander Medvedev said on Tuesday.

PGNiG said in a statement that its core earnings would rise by 2.5-3 billion zlotys ($776-$931 million) as a result of the deal. It imports most of its 14 billion cubic metre per year gas supplies from Gazprom, making it one of Russia's biggest customers.

Shares of PGNiG jumped 14 percent after the announcement. Gazprom was trading 0.6 percent down in Moscow.

A range of European consumers, confronted with an expanding array of gas supplies, including seaborne deliveries of liquefied natural gas which had been developed for the United States before the shale boom, won price cuts from the Russian export monopoly.

Gazprom had faced a barrage of arbitration suits over prices, most of which were withdrawn after retroactive price cuts averaging 10 percent for several European customers. Gazprom paid $4.25 billion under these agreements in the first half of the year.

The European Union has also launched a formal investigation into the long-term contracts and possible abuse of a dominant market position by Gazprom, mostly in former Soviet satellite states in Eastern Europe.

Gazprom said an addendum to its oil-linked contract with PGNiG took into account market prices for gas and refined products for deliveries on the Yamal-Europe pipeline, but left take-or-pay and

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