Poland must choose between shale gas and nuclear, admits minister

By bne IntelliNews June 13, 2013

bne -

In further evidence that Warsaw's ambitious energy strategy is in disarray, Poland's treasury minister admitted on June 12 that the country must choose between shale gas and nuclear power.

Speaking on state radio, Treasury Minister Wlodzimierz Karpinski said "it is obvious" that Poland is facing a choice between the two, reports Platts. He added that a decision will not be made until the country's potential for commercial shale gas extraction is clearer.

"We have to wait for this decision for two or three years in my opinion," the official said, "because then we will know what [shale gas] deposits we really have and how costly it will be to have production from them. It could turn out that we have geology that makes it very expensive to produce this gas."

Karpinski is the first Polish government official to admit that the country's ambitious drive to increase energy security is struggling, as foreign investors drop out of the hunt for unconventional gas on the back of poor test flows. Complaints from the state-controlled companies being pushed to plug the gap that they cannot keep up with all the investment demands, on top of recent sackings, has fuelled speculation that the shale gas push is losing momentum in Warsaw.

However, the government has furiously denied its strategy is in trouble. Indeed, on June 3, Karpinski insisted that shale gas remains Warsaw's "top priority," adding that the government will continue to push state-controlled companies to invest.

His more recent words are unlikely to cheer up his boss, Prime Minister Donald Tusk. Krzysztof Kilian, CEO of the country's top utility PGE, which is currently working on a project to build Poland's first nuclear power stations, said in October that the country could not pursue both strategies. Tusk - an old friend of Kilian's - immediately denied the government faced any such choice.

However, in April PGE announced it was pulling out of the PLN11bn expansion of the coal-fired Opole. A pet project of the PM's, last week the company was pulled back in with vague promises of state financing. However, that was too late to save Karpinski's predecessor, Mikolaj Budzanowski, who was sacked two months ago as pulled investments from state utilities piled up.

Grazyna Piotrowska-Oliwa, CEO of national gas utility PGNiG, soon followed. With both departing officials having been keen advocates of the Polish shale gas push, speculation rose that the government may have cooled its interest in the unconventional energy - which at one point it had hoped to see change the entire European gas market. That is not on the cards anymore, but estimated reserves still suggest Poland could vastly reduce its reliance on Russian gas imports.

The speculation increased last month when Polish media reported comments from investors claiming that they had been told by Deputy Environment Minister Piotr Wozniak that international companies are not wanted. The latest in a long series of delays in preparing a final set of regulatory and tax conditions only helped push those suspicions further.

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