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“Shameful” dependence: Poland hushes up growth of gas import from Russia

Photo: neftegaz.ru

Poland has increased import of gas from Russia, but it manipulates statistical data to hush up that fact. According to PGNiG Polish state-controlled oil and gas company, Gazprom has increased gas supplies to Poland more than any other supplier did. Experts say Russian gas is still the cheapest for the country, but Warsaw tries to cut import anyway, at the same time increasing it in winter seasons. Gazprom is the only supplier capable of increasing supplies promptly.

PGNiG has published performance report for Q1 2018. “Sales growth has resulted in an increase of gas imports for 19% to 3.84 billion cubic meters. The group has increased diversification of gas suppliers,” the company says. President of the PGNiG Management Board Piotr Woźniak says diversification is a strategic priority for the company, due to which the supplies from the East, namely from Russia, account for 78% of total imports versus former 84%. At the same time, import of LNG has increased for 31%, PGNiG reports.

Actually, Russia’s share in Poland’s total gas import for Jan-Mar decreased, but it was not about more imports from other companies. The reason is the consumption growth. According to the table in the company’s performance reports, Russian gas import for Q1 2017 totaled 2,709 billion cubic meters, and 2,989 billion cubic meters for the same period of 2018. Poland has increased Russian gas import for 9% or 273 million cubic meters.

In Q1, 2018, Poland’s state-run oil and gas company increased import from all suppliers, but the supplies from Russia were the largest. Supplies by European countries proved on the second place – Poland imported 214 million cubic meters more European gas than in Q1 2017 – 342 million cubic meters. LNG imports increased for only 110 million cubic meters to 510 million cubic meters.

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Last year, PGNiG signed a 5-year contract with Centrica (USA) for supply of up to nine ships of LNG from USA – a little over 1 billion cubic meters. This year, no liquefied gas has been supplied from USA yet. Poland imported it from Qatar only. Last year, PGNiG and Qatargas signed an addendum to the contract to increase LNG supplies. Poland will be importing 2.9bln cubic meters of LNG annually from Qatar by 2020.

Deputy Director of the National Energy Security Fund Alexey Grivach says Russian gas is still the cheapest for Poland. As to LNG imports, the country has certain commitments to suppliers. This is about policy, not economy.

“The company has committed to load LNG terminal. This is a political fetish for them. LNG gas costs them more, but they cover expenses through higher gas prices for consumers and re-export to Ukraine,” the expert said. He believes that gas at European hubs is more expensive for Poland than gas supplied under Russian long-term contract. “The difference is $30-$40 per 1,000 cubic meters at the average contractual price,” Grivach says.

Last year, Poland reduced Russian gas imports for 5% to 9,656 billion cubic meters. As to the growth of imports in the current year, Grivach explains it with cold weather in Europe and Gazprom’s capabilities to increase gas supplies promptly.

This May, Sabine Pass LNG Terminal admitted that Russian gas is more competitive now than LNG from USA. Gazprom can afford lower prices. “Of course, we can speculate whether American LNG can reduce prices in the same perspective. It seems that we can compete, but not in the short term, but rather in the long run,” said Andrew Walker, vice president of Cheniere Marketing and Trading at GAZTERM 2018, BiznesAlert.pl reported.

To recall, Poland is not going to extend the long-term contract with Gazprom after 2022. PGNiG has strategic plans to increase LNG import from USA and put into operation the Baltic gas pipeline with annual capacity of 10 billion cubic meters to get direct access to Norwegian gas fields after 2022.

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