Poland seeks Baltic Pipe gas supply deals

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Poland is under pressure to secure commercial commitments for a gas pipeline that will connect it with Norway via Denmark. A Polish government official said last week that the country must secure gas supplies for the project by the first quarter of 2017 if it is to survive without Russian imports.

This deadline must be met in order for Poland to have sufficient gas supplies in time for the expiry in 2022 of a long-term contract with Gazprom, Piotr Naimski, the government’s representative for energy infrastructure, has recently told. But he also expressed optimism about the proposed Baltic Pipe project, which has already been shelved twice.

“The plans to link deposits in Norway with the Polish gas transmission system will definitely succeed this time,” he said. Owing to “an understanding at the highest levels between Poland, Denmark and Norway … there is a green light for the pipeline,” he added. “There is a favourable political and economic situation.”

The first attempt to launch the project was ditched in 2001 amid concerns over the cost of Norwegian gas. A second attempt in 2007 also never got off the ground. It is anticipated that Polish oil and gas major PGNiG will have a role in the Norway pipeline project. The company currently extracts around 500 mcm per year of gas in Norway and aims to raise this to 2-2.5 bcm in 2022.

Poland plans to reduce its dependency on Russian gas, although achieving this will not be easy. Gazprom currently supplies more than two-thirds of the 16 bcm of gas that the country consumes each year. Other efforts to become less dependent on Russia include the construction of a new LNG terminal with a capacity of 5 bcm. Poland says it intends to expand the facility to 7.5 bcm at an unspecified point in the future.

Poland’s assertions that it will not renew its contract with Gazprom could prove to be a mix of optimism and bluff. Warsaw has made similar threats in the past but has never found itself in a position to say no to Russian gas. Any delays in the Norway link could therefore, push it back to the negotiating table with Gazprom, and in a weaker position than before.

On 15th November Gazprom’s Deputy Chairman Alexander Medvedev will give a keynote address at the EAGC. View the programme here.

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