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Monday, February 19, 2018

Poland puts pressure on Gazprom, trying to cash in at the expense of Ukraine

Gazprom and Poland entered into a new fray: the Russian monopoly has doubts about the reliability of the transit through Poland, and Warsaw in response to calls Gazprom “uncertain partner”. Verbal battles are an echo of the old conflict – as well as cover for Polish interests to profit at the expense of Ukraine.

Gazprom has warned about the risks of gas supplies to Europe, if Poland refused to renew a long-term contract after 2022. This was stated by Deputy Chairman of Gazprom Alexander Medvedev in interview to Agency “Reuters”.

“Warsaw wants the Ukrainian account to pull your commercially unsuccessful project of an LNG terminal in świnoujście”

Warsaw Alexander Medvedev struck a chord. They decided to use the occasion for another criticism of Gazprom. Comment from the company about the risk of gas supplies to Europe because of the unwillingness of Poland to prolong the transit contract after 2022 shows that the Russian company is “uncertain partner” for the country, said Deputy Prime Minister of Poland Mateusz Morawiecki (Mateusz Morawiecki). What exactly he had in mind, not reported – Russia strictly fulfils its contractual obligations to Poland and transit through this country is altogether of special importance.

Generally, in Europe, gas from Russia flows through three routes: one via Ukraine, the second – through the pipeline “Yamal – Europe”, passing through the territory of the Russian Federation, Belarus, Poland and Germany, the third – directly to Germany via Nord stream.

Gas relations with Warsaw being built on the basis of the contract signed in 1996. Moscow has never abandoned the Belarusian-Polish route. On the contrary, Gazprom is important to have this way, as the Belarusian section of the pipeline is the property of Gazprom. Thus, the current picks should be considered a continuation of the already rather old history.

Hard discussion about the future of gas relations of Russia with Poland, an ardent opponent of the “Nord stream – 2” and expanded access of Russian gas to the OPAL gas pipeline, started last year. The representative of the Polish government on the development of strategic energy infrastructure Piotr Naimski said that after a long-term contract to supply Russian gas to Poland (in 2022) the country does not intend to cooperate with Gazprom on a long term basis, and in the matter of procurement of gas from Russia will be guided by the economic attractiveness of natural gas.

What Vladimir Putin quietly responded: if Poland is not going to renew the contract for the purchase of Russian gas, then Gazprom can offer these volumes of gas on the Belarusian-Polish border to any other partner in Europe. As a prospective buyer, Putin called Polish, German, Austrian, Italian and French companies. Maybe the Israelis will buy and will sell this gas to Poland, Putin suggested, rather ironically.

In fact, for Russia it does not matter who is the specific buyer. The main thing – that without buyers of Gazprom’s not going to be. But Poland is the cessation of the supply does not Bode well. Because to find a worthy replacement for Russian gas in Warsaw just anywhere. Although Warsaw has already voiced a few ideas about new sources of natural gas.

Poland, first, already built on his site a liquefied natural gas terminal (LNG) in świnoujście (there is supplied gas from Qatar). Secondly, he announced plans for the construction of the main gas pipeline in the North sea, Baltic Pipe, which would enable it to receive gas from Norway through Denmark and the Baltic sea.

However, cheaper than from Gazprom, Poland’s gas will not find. For all the duration of the contract Warsaw regularly complained that she has to pay Gazprom more than other buyers. Claims from Poland with a demand to revise the price of Russian gas is not depleted in recent decades. And now, by the way, another claim of the Polish company PGNiG from may 2015 is considered in the Stockholm arbitration court.

Although it would seem, where much lower? Not only that, in 2012, Gazprom and so have reduced the price of gas for the Polish company to 10-12% and it was comparable to the prices for the Czech Republic and Italy – and even lower than for Lithuania. So in the last three years because of falling world oil prices, gas is significantly cheaper. This summer the Russian gas in Europe cost 20% cheaper than the fuel on the European spot market.

Average prices for Russian gas in Europe in 2016 was only 167-171 dollar per thousand cubic meters against 243 USD in 2015. To understand: in 2013, Poland bought gas at an average of 423 dollars, Italy and the Czech Republic – at 420-430 dollars, Lithuania – for 466 dollars per thousand cubic meters.

The purchase of Russian gas, among other things, also helps and Poland to earn extra as part of it she sells to Ukraine via the reverse channel. Plus Warsaw Gazprom pays for the transit of gas to Germany.

As far as alternatives, the economy of LNG is quite different from the gas pipeline route. Poland has to buy Qatari gas and a half to two times more expensive than Gazprom’s. And the choice of Warsaw is not, as the contract with Qatar it is obliged to annually buy 1.5 billion cubic meters. The capacity of the Polish LNG for the most part are idle, as is designed to supply 5 billion cubic meters of gas per year. But the poles download the terminal is not in a hurry – too expensive fuel. While actively trying to find other buyers of LNG coming through their terminal. In particular, most recently, Warsaw has started to promote the idea to supply LNG to Ukraine.

Poland plans to the end of 2019 to increase gas supplies to Ukraine from 1.5 to 5-6 billion cubic meters. It is planned to build a gas pipeline Interconnector Drozdovychi – Germanovichi. But most interesting is that Warsaw is not going to resell Russian gas Ukraine – it wants the Ukrainian account to pull your commercially unsuccessful project of an LNG terminal in świnoujście. Cheaper Russian gas to Poland will consume, and will offer Ukraine significantly more expensive LNG. And Kiev would have agreed.

Kiev has the contract for the transit of Russian gas just ends in 2019, and he also threatened him not to renew. If Warsaw can cheat the Ukraine and to sell her expensive liquefied natural gas, it will receive full utilization of its LNG terminal and will be able to quickly recapture invested in it investments.


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