Poland Will Still Need Russian Gas

22 november 2017 | Rossiyskaya Gazeta

Polish Minister for Foreign Affairs Witold Waszczykowski confirmed Poland's determination not to extend the contract for the supply of Russian gas, which expires in 2022, and urged the EU countries to build terminals for the liquefied natural gas. "Poland, in any case, will need Russian gas. The country should import 12-15 billion cubic meters per year," commented Alexander Kurdin, an expert of the Analytical Center, to the correspondent of Rossiyskaya Gazeta.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

To weaken dependence on Russia, Poland built a terminal for the import of LNG in Świnoujście with a capacity of about 5 billion cubic meters. Last year the Poles opened it, imported small volumes from Qatar (about 1 billion cubic meters) and now want to "capitalize" this achievement. The expert believes that, besides Świnoujście, Poland can get 5 billion cubic meters by pipelines from neighboring countries at best.

At the same time, the economic efficiency of importing LNG from Qatar is highly questionable. Nevertheless, the attractiveness of flexible short-term contracts for Poland is growing significantly, given the expected excess supply in the global LNG market in the next few years. This option allows optimizing the purchasing portfolio at any time depending on the market situation.

However, since the position of Poland in negotiations is not very strong yet, they need the support of other European partners to jointly stimulate Gazprom to switch to deliveries under short-term agreements and based on spot deals, Kurdin noted.

The expert believes that this current trend will take place on the entire European (and not only European) gas market as the LNG market develops and new suppliers from the United States and Australia appear.

"This does not mean that the supply of Russian gas will decrease. Everything will depend on the price policy of Gazprom. Gazprom's prices are competitive now and there is every opportunity to support such prices. Therefore, it is possible to preserve a room in the market, but it will be necessary to approach price policy and optimize own costs more carefully," Kurdin concluded.

Source: Rossiyskaya Gazeta