Diversification of Polish gas market

Basic information about Polish gas market The annual consumption of natural gas in Poland amounts to 17 billion m3. The gas market is growing rapidly. In 2017 the gas consumption was around 16 billion m3, and in 2018 it was already 17 billion m3. There is a debate going on about how fast the gas market will be growing. In my opinion, at the beginning of 20s the annual consumption may be 20 billion m3.

The role of the national PGNiG The dominant role on Polish gas market is played by national PGNiG The market is being liberalised. There are some private entities like HEG or DUON. In 2016 they delivered around 3 billion m3 of gas to the consumers, the rest was provided by PGNiG. The current government of Poland, however, is trying to slow down the liberalisation and to impose additional charges on private companies.   

Where does Poland get the gas from? In 2016 Poland extracted 4,18 billion m3 of gas. The import amounted up to 13,88 billion. 74 per cent of import was coming from Russian direction, 18 per cent from German direction (so de facto from Nord Stream, but officially from the exchange), 0.004 per cent form Czech direction, 6.94 per cent is LNG from Qatar and 0.56 is LNG from Norway.

Where does Poland want to get the gas from? Poland wants to have a more competitive market and opens up for non-Russian suppliers. Since 2015 there has been operating an LNG terminal in Świnoujście in Poland with the capacity of 5 billion m3. In 2018 its level of contracting hit almost 65 per cent, which was the highest result in Europe. The decision was made to expand its regasification capacity to 7.5 billion m3. PGNiG signed new big agreements for LNG deliveries – mainly from US, but also from Qatar. Big deliveries from US are to be executed in 2022 – until now they have been small only. According to PGNiG, the company will have at its disposal 10 billion m3 of gas in LNG contracts – 3 billion from Qatar, the rest from US. The part of it will be used in Poland, the other part will be sold on foreign markets.

In 2022 the Baltic Pipe is to start working In 2022 the Baltic Pipe is to start working. Its capacity will be 10 billion m3, which will enable Poland to receive gas from the hub on the North Sea.  Both projects should, at least from a technical point of view, enable Poland to resign from Russian gas. However, I wouldn't rule out the possibility that Russian gas will be still bought, e.g. in a form of SPOTs, even if the conditions of the contracts will be attractive.  

Poland as an re-exporter? Poland wants to build its own gas storage and interconnectors with neighbouring countries. It aspires to become a gas hub. Germany and Ukraine have similar plans.  Gas from the LNG terminal and Baltic Pipe could be sent to Czech Republic and Slovakia, but Ukraine is the most attractive market because they do not cooperate with Gazprom.  The gas consumption in Poland has been increasing and we do not know how much gas we could re-export. At the beginning of this year, PGNiG informed that they could rent or even buy a floating LNG terminal (FSRU), which will dock in Gdańsk. According to my informal information, such a decision has been already made.

Scenarios for Poland in 2022 This year Poland has to inform Gazprom if they want to end the ongoing contract, which expires in 2022.  If in 2022 Poland doesn't cooperate with Gazprom anymore and the Baltic Pipe project delays, the situation for Polish industry will be difficult.  In my opinion, the further cooperation with Gazprom in terms of short-term contracts is possible after 2022. The question is if Gazprom would be interested in this kind of cooperation.  The cooperation with Gazprom is politically controversial, especially because there are elections in Poland this year.  If there is no contact with Gazprom and the Baltic Pipe is delayed, the plan B for Poland in 2022 is to quickly rent or buy a floating LNG terminal. If it is possible or not – that is a question.  Another option is to import gas from German market, but de fact that would be gas from Nord Stream and that solution is politically difficult. 

E-mail: p.maciazek@viewpoint.com.pl Contact E-mail: p.maciazek@viewpoint.com.pl