Poland faces rush on Norwegian gas link to end Russian dependency

By bne IntelliNews September 15, 2016

Poland will need to secure commercial commitments for its planned gas pipeline from Norway via Denmark as soon as the first quarter of 2017 to ensure the pipeline can cover for the absence of Russian gas by 2022 - when the country's long term contract with Gazprom ends - an industry conference heard on September 15.

The planned link, known as Baltic Pipe, is a major element in Poland’s bid to diversify gas supplies before 2022. A government official told the oil, gas, and chemicals conference in Warsaw that the contract with the Russians will not be renewed. It is not the first time Polish officials have made that claim, but given the challenges, it may be a calculated negotiating tactic rather than a realistic stance.

"The contract expires in 2022 and there are no reasons or plans to extend it on current terms," Poland's proxy for strategic energy infrastructure, Piotr Naimski, said according to PAP.

Gazprom supplies more than two-thirds of the 16bn cubic metres of gas Poland uses each year. Warsaw, however, is pushing to reduce and eventually end entirely that dependency. The country’s new LNG terminal has a capacity of 5bn cm, and Poland says it plans to expand it to 7.5bn cm at some point in the future.

Should Poland end purchases from Russia, the remainder of gas could be supplied by the Baltic Pipe, Pawel Jakubowski, development executive at Polish gas infrastructure operator Gaz-System claimed.

However, to make sure the Baltic Pipe is up and running in time for Poland to increase its leverage in any talks with Gazprom, there would need to be commercial commitments by gas companies for the project by the end of March 2017, the development director of Danish gas grid operator energinet.dk, Soren Juel Hansen, told the conference.

Following an initial period marked by an apparent lack of enthusiasm on the part of the Nordic country, Hansen reports that Poland has now secured Denmark’s support for the project, which would link to Norwegian gas fields operated by Polish utility PGNiG. Energinet.dk is currently working on a feasibility study for the Danish section of the pipeline.

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