Poland's PGNIG sees profit surge under changed Gazprom deal

WARSAW, March 25 (Reuters) - PGNiG’s 2020 net profit surged more than 400% to 7.34 billion zlotys ($1.87 billion), Poland’s dominant gas company said on Thursday, after a rebate and new pricing from supplier Gazprom.

PGNiG buys most of the gas it resells from Russia’s Gazprom under a long-term contract dating back to 1996 and has often complained that it pays more than its Western European peers.

In June the two companies signed an annex to the agreement, confirming they would use a different pricing formula after an arbitration court ruled in March that it should be changed to take into account natural gas market quotes.

Following the court ruling, Gazprom also returned an overpayment of $1.5 billion to PGNiG.

“Undoubtedly, the most important event of the past year from the point of view of the company’s results was the outcome of the arbitration proceedings ... which was positive for PGNiG,” CEO Pawel Majewski said in a statement.

PGNiG gas sales rose by 3% in 2020 to 31.64 billion cubic metres (bcm).

“The demand for gas is expected to rise in the coming years due to the commissioning of new gas units in combined heat and power plants,” Majewski said.

The contract with Gazprom expires in 2022 and PGNiG does not intend to extend it. Beyond that date Poland expects to receive gas from Norway via the planned Baltic Pipe link. The company has also been increasing liquefied natural gas purchases.

$1 = 3.9168 zlotys Reporting by Agnieszka Barteczko; editing by Jason Neely