Poland seeks leverage on Gazprom from Norway gas link

By bne IntelliNews March 21, 2016

PGNiG plans to complete a gas link between Norway and Poland in 2022, the year Warsaw’s long-term gas contract with Russia expires, the Polish gas utility's deputy CEO told an industry conference on March 21.

Poland is pushing the plan keenly, in an apparent bid to gain leverage ahead of renegotiation of the Russian contract. However, the project has yet to raise much excitement in Norway.

The Polish state-controlled company has recently acquired gas exploration and production assets on Norway’s continental shelf and is looking at ways of bringing the gas to Poland. At the same time, as a state-run company, PGNiG has a mandate to diversify sources of gas supply. Russia currently supplies around 60% of the 16bn cubic metres Poland consumes per year.

Poland has taken steps recently to reduce that reliance. Alongside plans to transmit gas from Norway, the country’s recently commissioned LNG terminal is expected to start commercial operations by mid-2016.

"Construction of the corridor for gas transport [from Norway] ... should be realised by end-2022," said PGNiG’s deputy CEO Janusz Kowalski, PAP reported.

That schedule suggests the link would be ready as Poland’s current long-term supply contract with Russia expires. Warsaw is clearly looking for leverage in negotiating a new contract, and has been keen to point out it could expand capacity at its LNG terminal from the current 5bn cm to 7.5bn cm. Warsaw will have noted Lithuania secured a discount of over 20% from Gazprom just before its LNG terminal went online at the start of last year.

The CEO also claims to be seeking more acquisitions of upstream assets to feed the planned pipeline. "We do not rule out further acquisitions in Norway: this is consistent with the project of building the Norwegian corridor," Kowalski said. "We want to develop [PGNiG Upstream's] activity even more."

In late February, PGNiG said it was conducting talks with Norway and Denmark on building the link. The project would not constitute an entirely new gas pipeline from Norway to Poland, but would use mostly existing infrastructure to link the gas fields to Denmark. A new link would then be built to connect Poland to Denmark.

However, PGNiG remains a lone voice on the plan, with the "partners" yet to confirm any interest. Norweigan state oil and gas company Statoil, as well as Gassco, the Nordic country’s operator of offshore pipelines, both claimed last month they have little interest in linking Norway to Poland.





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