Polish PGNiG terminates contract on gas storage facility expansion

April 3, 2014

Polskie Górnictwo Naftowe i Gazownictwo SA has terminated its agreement with the consortium carrying out the construction work at the Wierzchowice Underground Gas Storage Facility, citing non-performance and defective performance of the agreement in conflict with its provisions as the grounds for the termination, PGNiG’s press office said on April 2.

In addition, the work on the project was delayed by 30 business days and the consortium failed to remove the default even after it had been given an extended, adequate deadline to do so.

The project was executed by a consortium comprising PBG S.A. w upadłości układowej (in company voluntary arrangement), TECNIMONT S.p.A. SOCIETE FRANCAISE D'ETUDES ET DE REALISATIONS D'EQUIPEMENTS GAZIERS SOFREGAZ, PLYNOSTAV PARDUBICE HOLDING A.S. and PLYNOSTAV - REGULACE PLYNU A.S. in organisational bankruptcy.

PGNiG called on the consortium to pay contractual penalties of PLN 133.4m, payable to PGNiG within 14 days of the receipt of the notice. The progress of work on expanding the Wierzchowice Underground Gas Storage Facility is 97%. PGNiG intends to complete it using PGNiG Group resources. The project is scheduled for completion by the end of 2014.

Source: PGNiG Press Office, 2014