Poland says Gazprom suspends cooperation

A dispute over a major pipeline carrying Russian gas to Europe resurfaced Tuesday, when Poland's state-owned gas monopoly accused Russian natural gas monopoly Gazprom of partially suspending cooperation.

The Polish company, Polskie Gornictwo Naftowe i Gazownictwo, or PGNiG, said OAO Gazprom was scaling back cooperation after PGNiG rebuffed a Gazprom request for lower transit fees.

PGNiG did not specify what, if any, the practical effect might be of the dispute involving the Yamal pipeline.

A Gazprom official acknowledged disagreements over tariffs, but denied the Russian firm was partially suspending cooperation with PGNiG or seeking greater influence over the pipeline operator.

The official, who asked that he not be identified further in line with company policy, said Gazprom was pursuing ways to resolve the dispute, including arbitration.

In a statement summarizing the outcome of a supervisory board meeting of pipeline operator EuRoPol Gaz in Moscow, PGNiG said Gazprom had demanded an increase in its shareholder rights going beyond a 1993 agreement that set up the company as a Polish-Russian joint venture.

PGNiG holds a 48 percent stake in EuRoPol, plus another 4 percent via its controlling share in another company, Gas-Trading SA. Gazprom owns the remaining 48 percent.

"The Russian side also questioned the level of tariffs for transit of gas through Polish territory," PGNiG said. "This position met with opposition by Polish representatives and was found to be totally unfounded."

The Polish company added that Gazprom representative Alexander Medvedev said the Russian side will restrict its participation in the supervisory board to "ad hoc discussion of technical issues."

"The Russian side declared it would be ready to resume normal work on the board when the remaining shareholders grant Gazprom greater influence over company management," PGNiG said. "In practice, this position will lead to an impasse in relations between the major shareholders and paralysis of the (EuRoPol Gaz) supervisory board."

Gazprom and PGNiG have been sparring for more than a year about control of EuRoPol, as the Russian giant looks to cut transit fees for its gas via the almost 435-mile segment of the Yamal pipeline through Poland to consumers in Germany and Western Europe.

The dispute re-emerged Tuesday, amid wider tension between Russian energy suppliers and the former Soviet bloc states of Easter Europe.

Last week, crude oil deliveries were cut off for three days to Poland and Germany after a dispute over prices and export duties flared between Russia and Belarus.

The European Union criticized the cut-off, suggesting it cast doubt on Russia's reliability as an energy supplier.

Moscow and Warsaw are also embroiled in a trade dispute that has blocked the start of negotiations on a new trade and energy agreement between Russia and the European Union, which Poland joined in 2004.

The EU has called a Russian embargo on Polish meat exports unjustified, while Warsaw says it won't lift its veto on the EU-Russian talks until the meat embargo is lifted.

Source:By RYAN LUCAS, businessweek.com