PGNiG Seeks Lower Prices from VNG

PGNiG, Poland's largest gas company, has said that it is seeking a reduction in gas prices from German distributor Verbundnetz Gas (VNG), with negotiations expected to take around six months.

Speaking to Polish daily newspaper Rzeczpospolita chief executive of PGNiG Grażyna Piotrowska-Oliwa said that it was seeking a reduction in line with the prices paid by others in Europe.

"We approached VNG with a proposal to lower prices for gas and its transportation, because we want to significantly lower purchase costs of this resource," the executive said. "I don't see any reason why we should pay more for gas imported from our western border, than the market costs in Europe."

PGNiG currently imports approximately 0.4 billion cubic metres of gas a year from VNG, one of just several import sources for the company which imports about 60 per cent of its gas needs each year. The reduction request comes as part of PGNiG's drive to become more profitable, with an increased focus on shale gas and on lowering gas import prices high on its agenda. The company has also sought price reductions from major supplier Gazprom.

Strict price regulations on the company's domestic prices coupled with high import prices have eaten into the company's profits, with PGNiG last month reporting that it had made a net loss on gas sales within the country.