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Sunday, December 4, 2016

The rejection of Russian gas Poland is already bearing huge losses


“We are independent in the gas issue” – happy Poland, which is finally built a terminal for receiving liquefied natural gas (LNG). Now Warsaw is really a new way of delivering gas – marine. The problem is that in the end Poland is not only saves, but also pays for liquefied natural gas from Qatar is much more and even now not receiving another from or cubic meter.

“Poland has achieved its strategic goals: we are independent in the gas issue”, – said Prime Minister ewa kopacz at the opening ceremony of the LNG terminal in świnoujście. It, of course, talking about getting rid of Russian gas, to which so zealously committed by the Polish government.

“It is unlikely that Warsaw would be willing to pay the real price for the refusal of the Russian gas in favor of LNG. This option would be a great folly”

“Now 90% we can get gas from other directions, not only from the East. Next year, if we work well, 100% we will be independent from gas supplies from the East,” – said kopacz. According to her, the terminal will allow Poland to purchase liquefied natural gas anywhere in the world and to obtain it by sea. “This independence will provide an opportunity to negotiate the price of gas”, – said Polish Prime Minister.

The terminal project dragged on for 10 years. The decision was taken in 2006, in 2008 signed a contract with the contractor firm Saipem (a subsidiary of Italian energy giant Eni). Construction began in 2011. Was originally going to build terminal by 2013, but the final was delayed for two years.

The terminal will work only in mid-2016. Before commercial launch, we must first upload technical or buffer gas, which will maintain pressure for pumping gas commercial. First LNG tanker to arrive in Swinoujscie in mid-December from Qatar, the second – in February-March. The first two games of LNG is also required to perform commissioning works, performance tests. In the end, the full launch of the terminal with additional volumes of gas in GTS (gas transportation system) will take a few more months.

The Polish Prime Minister, saying that the LNG terminal will make it unnecessary to Russian gas, very disingenuous. In reality energy Poland remains heavily dependent on Russian gas. In 2014, Poland consumes 15.5 billion cubic meters of gas. Domestic production covered less than a third of the needs – 28%, or 4.4 billion cubic meters, imports more than 70%, or 11 billion cubic meters. Russia delivered in 2014 to 8.4 billion cubic meters, that is, provided almost 80% of all imported gas. And only 20% of import of gas into Poland from Germany, Czech Republic and Norway.

The new terminal has a storage capacity for 5 billion cubic meters of gas. That’s a third of the annual demand of Poland. It is assumed that the capacity of the terminal can be expanded to 7.5 billion cubic meters.

Now Warsaw is really a new sea route to deliver gas, that’s just what cost? Firstly, Qatar currently is the only supplier with which Poland has concluded in 2009 a contract to supply 1.5 billion cubic meters of LNG. Qatar would fill only a third of the capacity of an LNG terminal, two-thirds of the power is still not contracted, although Warsaw was assured that are looking for suppliers. The reason may be the disappointment of LNG, which is too expensive.

The contract with Qatar is extremely disadvantageous for Polish consumers. According to it, Poland is obligated for 20 years to buy about 1.5 billion cubic meters of LNG a year from Qatargas on a “take or pay”. But the price of Qatari gas is 2.5 times more than the cost of the Russian, says the newspaper VIEW analyst “Alpari” Anna Kokoreva. So, according to her, the price of Russian gas – $ 265, and Qatari – $ 700 per thousand cubic meters. Paradoxically, the fact that last year, Poland once again started to demand a discount for gas from Gazprom, and not from Qatargas.

For comparison: in Russian 8.4 billion cubic meters Poland will pay $ 2.2 billion for theoretical Qatari 8.4 billion cubic meters would be $ 5.9 billion. It is unlikely that Warsaw would be willing to pay the real price for the refusal of the Russian gas in favor of LNG. This option would be a great folly.

Meanwhile to buy 1.5 billion cubic meters of Qatari gas Warsaw have, in any case, in order not to violate the contract. Moreover, Poland is the second year we have to pay for it.

The fact that Poland in the agreement have pledged to begin purchasing Qatari LNG in 2014 (after all, originally wanted to build the LNG terminal in 2013). However, construction was delayed, but Qatar is required to meet contractual obligations. In the end we agreed that Qatar sells for Poland contracted LNG to other buyers at a lower price, but Warsaw compensates for the price difference, told the newspaper VIEW Alexey grivach of the national energy security Fund. That is Poland still can not physically take Qatari gas, but pays for it and continues to pay. The first two tankers of LNG from Qatar, which should come in December and in early 2016, will bring technical gas. Its products are supplied under another agreement, signed in September of this year.

Thus, the supply of Qatari gas has already ruinous to Poland. Due to them, Warsaw will be decades to recoup the cost of the project LNG-terminal, which amounted to 977 million dollars.

In any case, the 1.5 billion cubic meters of Qatari LNG Poland now have to buy. If the consumption will not grow, then the same amount can decrease the supply of gas from Russia. But in this case you can only talk about diversification of sources of gas supplies to the country, not about the rejection of Russian gas. Warsaw will only reduce the share of Russian gas in imports from 80 to 60%. Such diversification will cost Warsaw 652,5 million dollars is overpayment for the purchase of 1.5 billion cubic meters of Qatari gas 700 dollars instead of Russian gas for 265 dollars. To go further on such economically unjustified way just crazy.

It should be noted that spare capacity LNG terminal Poland hopes to load gas from the spot market. But the specifics of this market – dependence on supply and demand. In the summer, when gas consumption in Europe is declining, the price of spot gas may be lower than pipeline supplies, but in winter, when demand for fuel increases dramatically, the supply on the spot market is limited, and the gas is dramatically more expensive. Most importantly, during the heating season, the spot market is not able to give assurances to the buyer that he will receive as much gas as he needs (unlike Gazprom, guaranteeing volumes).

Earlier, the Warsaw spoke of another embodiment of the rejection of Russian gas. Last year, Poland started reverse deliveries from Germany through the pipeline “Yamal – Europe” thanks to the modernization of gas-pumping station “Mallnow” in East Germany (started renovation in 2012). Poland then threatened that at the expense of the reverse to up to 5.5 billion cubic meters of gas a year, if will stop gas supplies from Russia. Warsaw, however, never refused to buy Russian gas, in spite of all their political statements and claims to the price of gas from Russia.

In any case, the rejection of Russian gas in favor of Germany is actually the reverse would mean that Poland will continue to buy Gazprom’s fuel, only through an intermediary on paper. Gazprom, most likely, will compensate the lost amounts of Polish due to the growth of supply in Germany. Warsaw in this case have to pay for gas in the form of margin by the broker. Exactly the same as it does now Ukraine, which from summer to literally October 12, bought only the reverse gas from Europe at a higher price to Gazprom.

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