Energy Cooperation

“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 Orban, prime minister of Hungary, not everybody’s first choice for words of wisdom perhaps. Be that as it may, the Polish government, no stranger to chasing ghosts, is pursuing this particular one and, for once, cannot be faulted for so doing.

On Thursday Poland’s state-run gas company PGNiG signed a long-term contract to buy liquefied natural gas (LNG) from the United States as part of efforts to reduce the dependence on gas from Russia. As reported by Polish Radio’s IAR news agency, the 24-year contract was signed deal with US supplier Cheniere in Warsaw in the presence of Poland’s President Andrzej Duda and US Energy Secretary Rich Perry. Duda said that Poland was interested in diversifying its gas supplies and that talks about the contract began when US President Trump visited Poland last year.

Under this contract, Poland expects to import 29.5 million tonnes, or nearly 40 billion cubic metres, of American LNG over 24 years. PGNiG last month said it had finalised a 20-year contract for the purchase of two million tonnes of LNG from two subsidiaries of the US-based Venture Global LNG company. Poland’s state PAP news agency quoted PGNiG’s CEO Piotr Woźniak as saying that Poland would be paying “20-something per cent” less for US gas than for Russian supplies. Poland uses approximately 17.5 billion cubic metres of gas annually.

This is in keeping with the Safeguarding Freedom, Building Prosperity Through Poland-US Strategic Partnership declaration which presidents Duda and Trump signed at the White House during Duda’s visit to Washington in September. The declaration contains a section on energy whereby Poland and the United States undertake to “enhance cooperation on energy security” and “explore new opportunities stemming from the transformation of energy markets” and to “work to ensure better energy diversification of Europe.” The two countries also agreed to “continue to coordinate” their “efforts to counter energy projects that threaten our mutual security, such as Nord Stream 2.”

Indeed, as a follow-up to that declaration, on Thursday in Warsaw Rick Perry and Polish energy minister Krzysztof Tchórzewski signed a joint declaration on enhanced energy security cooperation. This second declaration covers the security of gas supplies, the development of nuclear energy and cyber security support. Rich Perry had been due to visit Poland’s LNG terminal at Świnoujście until the weather intervened.

Speaking in Warsaw instead to launch the US-Poland strategic energy dialogue he re-iterated that the two countries will enhance cooperation on energy security, support expanded efforts to enhance energy cooperation and diversification – including nuclear energy – and to continue to coordinate our efforts to counter energy projects that threaten mutual security. Through the dialogue, the focus will be on the critical areas of cybersecurity, nuclear energy, fossil energy and energy infrastructure.  The US energy secretary said that he looked forward to convening the inaugural round of the dialogue at the beginning of next year in Washington.

He also expressed repeated concern about the Nord Stream 2 Project which he described as not a commercial project, as its proponents proclaim, but rather a political gambit to drive a single-source gas artery deep into Europe, giving the Russian Federation further leverage over Europe. On the other hand, he said that the US has long advocated for projects like Baltic Pipe, which would bring new supplies of natural gas from Norway via Denmark to Poland. Indeed, once the Baltic Pipe opens, Poland will be able to import 17 billion cubic metres of gas a year from sources other than Russia by 2022, the target date for ending dependence on Russia.

Thus, when it comes to ending dependence on Russia for gas supplies, the Polish government is taking sensible steps. Now, if only it could be as equally adventurous in dealing with coal.

This entry was posted in Business, Current Affairs, Economy, Energy, Russia, Security. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>