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. Last Updated: 07/27/2016

Gazprom, Poland Move Toward Supply Contract

WARSAW, Poland -- The Polish government and Gazprom inched toward a deal for Russian gas supplies to Poland but failed to finalize terms, officials said Friday.

Gazprom's head Alexei Miller and Polish Prime Minister Leszek Miller late Thursday held the latest in a series of talks aimed at renegotiating a long-term contract between the two countries to reduce Poland's gas imports.

"The climate of the talks has changed, and the Russians are now viewing the renegotiation of gas supplies as an option for the first time," Polish government spokesman Michal Tober said. "But no decision has been reached yet."

Faced with slower than expected economic growth, which is seen curbing gas demand, Poland wants to renegotiate its long-term deal with Russia, originally due to bring into the country 250 billion cubic meters of gas through 2020.

Last week, the Polish government slashed its forecast for gas demand by nearly a quarter to 12.7 bcm to 13.7 bcm a year by 2005. Demand is currently around 11 billion bcm a year.

Poland has to clinch a deal on gas supplies by the end of year, the deadline for deciding on whether the government wants to approve another long-term agreement with Norway, signed by the previous Cabinet in 2001.

"We are planning a visit soon by representatives of the Russian government at the appropriate level at which we can finalize today's conclusions," Polish Prime Minister Miller told reporters late Thursday. "Everything points to today's outcome as being favorable for both sides."

During Thursday's talks, Poland and Gazprom also agreed to raise the capital of EuroPol Gaz, a company jointly owned by Gazprom and Polish state gas monopoly PGNiG, Tober said.

EuroPol Gaz runs the Yamal-Europe transit gas pipeline, which pumps Russian gas across Poland to Germany. Part of this pipeline is also the subject of talks between the two states.

"There is an agreement to boost the capital of EuroPol Gaz," Tober said without elaborating.

Gazprom chief Miller told Russian media that the fresh capital would fund construction of two compressor stations to boost the capacity of the original Yamal-Europe link.

"The gas pipeline project is important for Russia because it guarantees contract deliveries to Western Europe and for Poland because it ensures gas transit and revenues to its budget," Miller told Russian television.

Facing a tough sell in its plea to reduce gas delivery volumes from Russia, Poland appears to have warmed toward Gazprom's plans to boost its exports bound for western and southern Europe with a link from Belarus via Poland to Slovakia.

This is despite Poland's concern that Gazprom's scheme could derail the earlier planned completion of an existing route, the second stretch of the Yamal-Europe pipeline.

Russia and Poland agreed in 1993 to build the giant gas link from Russia to the West via Belarus, Poland and Germany. But the expansion project has been hit by financing difficulties and disagreements over taxes.