Poland plans not to renew long-term gas contract with Russia

By bne IntelliNews May 31, 2016

Poland will not renew its long-term gas contract with Russia after it expires in 2022, a government official told an industry conference in Warsaw on May 30.

Poland may buy Russian gas if the price is attractive, but purchases would “definitely not be based on a long-term contract formula”, Piotr Naimski, the government proxy responsible for strategic energy infrastructure, said at conference on investments in Eastern Europe, organised by Reuters. Poland uses about 15bn cubic meters (cm) of gas annually, and typically around two thirds of this comes from Russia.

However, according to Naimski, Poland now has options to reduce gas purchases from the eastern neighbour. The country’s LNG terminal is about to receive its first cargo in June and, once in full operation, it will be able to take in 5bn cm of gas. Poland is already mulling expanding the terminal’s capacity to at least 7.5bn cm of gas, with would be nearly equal to the 8bn cm Warsaw purchased from Russia in 2015.

Other than the terminal, Poland is also looking to build a gas pipeline linking Polish gas utility PGNiG’s Norwegian production assets to Poland via Denmark. Naimski also said Poland can cover its demand for gas with spot purchases from the German gas exchange.

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