Poland looks to free region from Gazprom via shared use of pipelines

By MAREK STRZELECKI
Bloomberg

Poland seeks to help eastern Europe cut its reliance on natural gas from Russia’s OAO Gazprom by allowing its neighbors to use its pipelines and a sea terminal to access alternative supplies.

Poland for the first time got more gas from western Europe than from Gazprom for two days this month, proving that it can already diversify its own supplies, Jan Chadam, CEO of state-owned Gaz-System, said Monday in an interview.

New infrastructure by 2018 will allow the Warsaw-based pipeline operator to transport gas to a region that uses almost a quarter of the European Union’s total, he said.

Europe is seeking to diversify gas supplies away from Russia after they became more expensive than traded gas in western Europe. Flows from the east were threatened for a third winter since 2006 because of the conflict in Ukraine, which transports about 40% of Gazprom’s exports to Europe.

While Poland’s coal reserves make it one of Europe’s smallest gas users, it is the only country to border both Ukraine and Germany, two of the region’s biggest consumers.

“We have a unique location in Europe and it’s a unique time in history,” Chadam said. “If we don’t use this opportunity, someone else will.”

Poland will this year complete its first liquefied natural gas (LNG) terminal, with pipelines planned to Lithuania, the Czech Republic, Slovakia and Ukraine by 2018, Chadam said.

That will allow Gaz-System to transit gas to markets with annual use of about 100 billion cubic meters (3.5 trillion cubic feet) of mainly Russian fuel, he said. European members of the Organization of Economic Cooperation and Development, excluding Turkey, consumed less than 400 billion cubic meters last year, according to Societe Generale.

EU Supplies

Poland can currently meet 95% of its import needs with pipeline fuel from EU suppliers. Gaz-System has since 2011, when the nation could get less than 10% of its foreign gas from sources other than Gazprom, built 1,200 kilometers (745 miles) of pipelines.

It also began so-called reverse flows on the Yamal link between Russia and western Europe and was the first EU nation to start supplying Ukraine by pumping gas through pipes originally planned to flow only from east to west.

Under a 2010 agreement with Gazprom, Gaz-System took over the management of the Polish section of the Yamal pipeline. The Polish company last year paid “a few million euros” to install measuring equipment on the German side of the link that allow it to get 5.5 billion cubic meters from its western neighbor.

Gazprom Contract

In 2018, Poland will be able to import nearly 40 billion cubic meters of gas, four times current imports, according to Chadam. The nation is still bound by a gas supply contract with Gazprom that was renewed in 2010 and runs to 2022. Gaz-System declined to specify on which days western European supplies were higher than those from Gazprom.

Gazprom has been a reliable supplier to Europe for more than 40 years and remains so, CEO Alexey Miller said Jan. 14 after a meeting with Maros Sefcovic, the European Commission’s vice president for energy union,

Gaz-System is in talks with LNG suppliers from the US and Canada to offer capacity at the Polskie LNG terminal currently being built in Swinoujscie on the Baltic Sea, with an initial regasification capacity of 5 billion cubic meters/year, almost a third of Poland’s demand.

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