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Polish-Russian gas deal tests EU energy policy

Evropa

  16:13

A Russo-Polish gas deal tests EU energy policy as Warsaw prioritizes domestic consumers.

If Gazprom and PGNiG deny access to third parties, Poland could face ECJ proceedings foto: © GazpromČeská pozice

Polish Deputy Prime Minister Waldemar Pavlak and his Russian counterpart Igor Sechin on Oct. 29 signed amendments to agreements on Russian gas deliveries to Poland concluded between 1993 and 2003. At the same time, Russia and Poland’s state-controlled gas majors Gazprom and Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) signed amendments to the Yamal gas pipeline agreement signed in 1996. The European Commission, however, has said this new contract lacks important details.

EC Energy Commissioner Günther Oettinger announced in Warsaw on Nov. 4, that while the new intergovernmental agreement complies with EU law, the EC expects Poland to submit a written declaration on the future ownership and operation structure for the Polish section of the Yamal pipeline.

This means that if Gazprom and PGNiG retain access privileges to the pipeline and deny access to third parties, Poland could face court proceedings at the European Court of Justice in Luxembourg.

 Several hours earlier, however, Poland’s Deputy Finance Minister Mikolaj Budzanowski had announced — following a visit to Brussels where the contested points of the operational contract were discussed — that all of the EC’s reservations had been addressed.

Short-term shortages

Following the Russo-Ukrainian gas dispute in early 2009, the Swiss-registered Gazprom-controlled gas trading company RosUkrEnergy, which was a long-term supplier of gas to Poland, lost rights to trade in Russian and Central Asian gas. This meant Poland faced losing 2.3 billion cubic meters (BCM) — approximately a sixth of the country’s annual consumption. For the time being this has been avoided thanks to short-term delivery contracts negotiated with Gazprom.

Poland relies on Russia for approximately three-fifths of the gas it consumes.

The cut-off of gas supplies to Ukraine in 2009 was an opportunity for the Russians to improve their position in Poland. Primarily Gazprom has sought to regain its initial 50 percent stake in EuroPolGaz, which operates the Polish section of the Yamal gas pipeline. Currently PGNiG and Gazprom both own 48 percent of EuroPolGaz. The remaining 4 percent is held by Polish-controlled Gaz Trading, majority owned PGNiG and Bartimex. Gazprom daughter company Gazprom Export holds 15.9 percent of Gaz Trading.

Potential Glut in mid-term

The Russian and Polish governments finally reached a provisional agreement in September 2010 that is valid 2037. However, the Polish opposition rejected the draft deal because it contained a clause forbidding the re-export of gas purchased by Poland. This, they said, could lead to Poland ending up with a surplus of natural gas that it could not sell.

An LNG terminal near Świnoujście on Poland’s Baltic Sea coast is due to be completed in 2014 with initial capacity to import 2.5 BCM and later up to 7.5 BCM annually. Additionally, surveys indicate that Poland has large potential reserves of shale gas, though questions remain over its extraction.

As a result, the duration of the intergovernmental agreement was not prolonged and the ban on re-exporting gas dropped, but it remained unclear whether the revised agreement complied with EU law. The Russians and Poles requested the EC to act as an intermediary.  

Under the Oct. 29 agreement, Russia will deliver an extra two to three BCM annually over the next 10 years. This should ensure that Poland will receive sufficient gas supplies for the next decade. The aim of the legislation is to dismantle monopolies over energy supplies.

For the EC, the most important part of the agreement is the pledge by Gazprom and PGNiG to sell their shares in EuroPolGaz to the Polish state-controlled Gaz-System — the operator of all other gas pipelines in Poland. This would ensure complicity with the terms of the EU’s third energy package, due to come into effect March 2011, and bans oil and gas producers from majority ownership of pipelines. The aim of the legislation is to dismantle monopolies over the supply of energy to allow more competition.

The agreement on transiting gas via Poland is valid until 2019, and the contract on deliveries to Poland until 2022 with a clause for extension until 2045.

But Brussels still wants to know how free transit capacity in the Polish section of the Yamal pipeline will be calculated to ensure fair access for other companies: what guarantees will be implemented for the reverse flow of gas via the Polish section of Yamal; how transit fees will be calculated; and how future investments into the pipeline will be managed.

In short, the EC wants guarantees that other interested firms will have access to free capacity in the pipeline under the same conditions as Gazprom and PGNiG. 

Another unresolved issue is who will set the fees for gas transit through Poland. According to the daily Gazeta Wyborcza, the EC is demanding that Gaz-System be responsible.

However, according to the intergovernmental agreement, Gazprom is set to regain a 50 percent stake in Gaz Trading with PGNiG to take control of the other 50 percent. It also contains a clause that clearlystipulates that EuroPolGaz will set transit fees.

Brussels is waiting for answers from Poland’s Energy Regulatory Office which Brussels expects to play a key role in implementing its demands.

A test of EU energy policy

The Polish gas issue has served as an opportunity for both Russia and the EU to test each others’ resolve on energy policies.

“Poland has become a testing ground for the EU’s third package of energy measures,” Alexander Medvedev, director general of Gazporm Export, told the Russian daily Kommersant. The experience will serve Gazprom when it comes to further negotiations on the delivery of gas via the Nord Stream pipeline, he added.

Currently under construction, the Nord Stream pipeline will transport up to 55 BCM a year from Russia, under the Baltic Sea to Germany and bypass transit countries. Deliveries are due to begin in late 2011.

Warsaw has resisted unbundling its gas market as prescribed by Brussels because it says such steps would paradoxically result in more expensive gas, according to the Polish daily Dziennik Gazeta Prawna.

PGNiG currently mixes Russian gas, which costs around $350 per thousand cubic meters, with cheaper gas from its own sources and sells this product to end consumers at advantageous rates. 

FOR KIDS by měl být zážitkem pro celou rodinu, říká Monika
FOR KIDS by měl být zážitkem pro celou rodinu, říká Monika

Monika Pavlíčková (35 let) je maminkou dvou dcer, sedmileté Terezy a čtyřleté Laury, a zároveň také manažerkou obchodního týmu společnosti ABF,...