Energy Security

“Whoever thinks… that the European economy can be competitive without economic cooperation with Russia, whoever thinks that energy security can exist in Europe without the energy that comes from Russia, is chasing ghosts.” The words of Viktor Orbán, Hungarian prime minister and not, it has to be said, everybody’s cup of tea when it comes to selecting words of wisdom. Therefore, who better than his ideological bed-fellows, and themselves no strangers to chasing ghosts, the Polish government, to prove him wrong?

Last week, Polish state-run gas company PGNiG, as reported Polish Radio’s IAR news agency, announcedthat it had signed a long-term agreement with two American companies for the purchase of liquefied natural gas (LNG) from the United States as part of the effort to make Poland independent of Russian supplies. Under the agreements, with Port Arthur LNG and Venture Global LNG, PGNiGaims to import more than 100 billion cubic metres of LNG from the United States over 20 years.PGNiG’s CEO, Piotr Woźniak, was quoted as saying that the agreements, which the Polish company signed in Washington on Tuesday, “will not only allow further diversification of our import portfolio following 2022, but will also let us develop our trading competences and enable PGNiG’s presence as a global LNG market player.”

Port Arthur LNG and Venture Global LNG are building LNG terminals on the Gulf of Mexico that are expected to be completed in 2022 and 2023 and once ready, Poland will start importing 5.5 billion tonnes of LNG from them each year. Woźniak was quoted as saying that Poland aimed to rely on three sources of natural gas in five years: its own deposits, LNG from the United States, and gas imported from Norway via Denmark through a planned new pipeline known as the Baltic Pipe. Poland aims to stop importing natural gas from Russia after 2022, when the long-term gas supply agreement with Gazprom expires.

And, on that front, there is potentially good news, with a Stockholm-based arbitration court ruling that PGNiG may demand a lower price for gas it buys from Gazprom under that contract, PGNiG announced on Saturday.PGNiG filed for arbitration in May 2015, arguing that it was paying more for Russian gas than other buyers in Europe. The court has now issued a “partial ruling” in which it sided with PGNiG. “We are satisfied with the Tribunal’s ruling, which confirms PGNiG’s right to demand a reduction of the contract price and we await the reduction of the contract price to the level of market prices at a later stage of the proceedings,” PGNiG CEO Piotr Woźniak was quoted as saying in a statement.

Of course, there is more to energy security than gas supplies.  Thus, on Thursday, in Brussels, Poland, the Baltic states and the European Commission, signed an agreement by which Latvia, Estonia and Lithuania will be able to decouple their power grids from Russia.Baltic electricity systems will instead be connected to the Continental European Network (CEN) via Poland by 2025 under the agreement, which was signed by the prime ministers of Poland, Latvia and Estonia, the president of Lithuania, and the President of the European Commission, Jean-Claude Juncker.

Polish prime minister, Mateusz Morawiecki, was quoted as saying during the signing ceremony that Poland was helping the Baltic states to break their dependence on Russia. “We are taking a very serious step in the right direction today, one whereby Poland is boosting the energy security of the Baltic states, while at the same time showing solidarity with these countries and consistently implementing its own policy of enhancing energy security”.

All of which seems eminently sensible if dependence on Russia for any energy supplies is considered to be undesirable. Germany appears to be taking a more sanguine view of Russian gas supplies, however, with the Nord Stream 2 project moving ahead (please see Neighbours). One can hardly blame the Polish government for following a different path, especially when the ghosts of the historic consequences of Russian-German cooperation are all too real, albeit that the world has – hopefully – changed.

 

 

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