Poland to stop buying Russian gas?

Poland to stop buying Russian gas?

Poland will not buy Russian gas after 2022, the government’s strategic energy infrastructure commissioner Piotr Naimski said.

“Both Baltic Pipe and expansion of the liquefied natural gas (LNG) terminal is our strategic way out from the existing situation of dependence on Russians,” Naimski told Polish Radio.

“After 2022, this problem will be solved, all Poland’s gas imports will be from another direction,” the Prime news agency cited him as saying.

An agreement on gas supplies signed by PGNiG and Russia’s Gazprom in 1996 expires in 2022. In 2018, PGNiG reduced gas imports by 6.4%.

In June 2017, Poland and Denmark signed a memorandum on construction of the Baltic Pipe gas pipeline with a projected capacity of 10 billion cubic meters. The project is expected to be implemented in 2022.

A senior analyst of 'Uralsib', Alexei Kokin, speaking to Vestnik Kavkaza, noted that it is expected that Poland will not completely abandon Russian gas. “It is more likely that the long-term contract will be replaced by shorter-term contracts. The structure of the gas market in Europe is changing as a whole, and the role of long-term contracts is declining,” he explained.

“Most likely, Gazprom’s supply to Poland will depend on market conditions. Maybe nothing will change, but the whole market will operate on short-term contracts. This is a new market reality, which is likely to benefit Gazprom, because flexibility will be provided not only to customers, but also to suppliers," Alexey Kokin added.

The director of the Centre for International Energy Markets Studies, the Institute of Pricing and Regulation of Natural Monopolies at the Higher School of Economics, Vyacheslav Kulagin, drew attention to the fact that no country in Eastern Europe can import gas cheaper than hose offered by Gazprom. "If Poland decides to reorient to other supplies, technically it can be done, but they will have to pay for it," he said.

“At the same time, it would still not be very reasonable for Poland to focus exclusively on LNG supplies: gas demand can increase quite quickly due to various factors, including weather. If, say, there are severe frosts, then pipeline gas can simply be bought in a larger volume, but the delivery of additional volumes of LNG from the U.S. will take time: buy an additional tanker at first, send it to Poland, it will take a month, "Vyacheslav Kulagin drew attention.

“There is no big threat to Gazprom here. Norway does not have the opportunity to increase production in order to start supplying additional volumes to Poland; accordingly, Norway will have to redistribute supplies from other directions to fill the Baltic Pipe. Supplying Norwegian gas to Poland means that it left any other European country. In fact, it will be just a redistribution of supplies on the European map," the director of the Centre for International Energy Markets Studies, the Institute of Pricing and Regulation of Natural Monopolies at the Higher School of Economics stressed.

“We will compete only on LNG, but everything will depend on free capacities the Americans will have. If there are no free capacities, then the situation is the same as with Norwegian pipeline gas: American LNG will come to Poland, and some other section of the market will be exposed, and can be occupied by Russian suppliers. But if they have a lot of free capacities, then, indeed, the replacement of Russian gas will begin. But large free capacities can only mean one thing - this gas is too expensive, and therefore no one wants to buy it," Vyacheslav Kulagin concluded.