PGNiG has signed an agreement with the German firm VNG to buy gas worth of PLN 4.9bn, the company announced in a statement on Friday. On the basis of the agreement PGNiG would buy up to 500m cubic meters of gas a year between October 2006 and October 2008. As a result of the VNG contract, the supply gap, which is planned to be fulfilled via long term contracts by PGNiG has been contracted to 1.5bn cubic meters.
Our view: PGNiG aims to diversify gas purchases to lower dependency on Russian imports. The recent agreement therefore could also be considered as a kind of message to Gazprom, whom PGNiG is talks to contract for additional amount of natural gas from 2007. The news, however, is neutral for the share price as we don't know the premium PGNiG pays for this gas relative to current purchase price.