Poland wants to consistently pursue its policy of diversifying gas supply sources and thus reducing its dependence on Russian raw material supplies. For the first time in official government documents, Warsaw informs about the plan to abandon the Yamal contract after its expiry – writes Piotr Stępiński, editor of BiznesAlert.pl.
Another amendment to the Terminal Act
On the eighth of January on the website of the Government Legislation Centre, a draft amendment of the Act on investments in the LNG regasification terminal in Świnoujście and certain other acts of law were published, whose author is Dr. Piotr Naimski, Government Representative for Strategic Energy Infrastructure. – as informed by BiznesAlert.pl
The so-called Terminal Act was adopted in 2009. Its objective was to facilitate the implementations connected not only with the construction of the LNG terminal in Świnoujście, but also with an appropriate infrastructure enabling the distribution of the raw material delivered to the Polish gas port. The Act was amended in 2014. Włodzimierz Karpiński, the then Minister of the State Treasury, argued that the introduction of further simplifications in the decision-making process would speed up investments, which would make it possible to make greater use of the possibilities of the Świnoujście terminal. Apart from administrative simplifications, the catalogue of the so-called accompanying investments which will be subject to the provisions of the Terminal Act, was extended. At that time, it included, among others, Poland-Czech Republic, Poland-Slovakia, and Poland-Lithuania gas pipelines.
As in the 2014 amendment, the draft of changes prepared by Minister Naimski, in addition to the removal of further administrative obstacles, provides for an extension of the catalogue of accompanying investments. The following projects were included in it:
•construction of gas pipelines connecting Baltic Pipe with the Goleniów hub or compressor station, together with the infrastructure necessary to operate them in the Zachodniopomorskie Region,
•construction of the Poland-Ukraine gas pipeline, which will be directly connected to the Hermanowice hub, and to the Hermanowice-Strachocina gas pipeline, the compressor station and the Strachocina gas hub via this hub
•construction of the Swarzów-Rozwadów gas pipeline together with the infrastructure necessary for its operation in the Małopolskie, Świętokrzyskie and Podkarpackie Regions. The transmission line is one of the points of connection between the eastern and western part of the North-South Corridor.
•construction of the Lewin Brzeski-Nysa gas pipeline together with the infrastructure necessary for its operation in the Opolskie Region,
•reconstruction of the Świnoujście-Goleniów gas pipelines together with the infrastructure necessary for their operation in the Zachodniopomorskie Region.
•restoration, extension, reconstruction or renovation of the Rembelszczyzna-Mory-Wola Karczewska-Rembelszczyzna gas pipeline together with the infrastructure necessary for its operation in the Mazowieckie Region.
In the RIS (Regulatory Impact Assessment – editorial note) it was stated that the extension of the aforementioned list will not only contribute to the increase of the gas transmission capacity from the terminal to customers in Poland, but also within the framework of the North-South Corridor project enforced among others by Poland. It is intended to connect our Świnoujście gas port with the planned regasification facility in Croatia. The implementation of this project is to contribute to the Central and Eastern European region’s access to new sources of gas, reducing the dependence on supplies from the eastern direction and increasing their security.
Poland is preparing for the construction of Baltic Pipe
An important factor in achieving this goal is using the possibility of obtaining alternative gas sources, which is offered by the so-called Northern Gateway, i. e. the LNG terminal in Świnoujście and the Baltic Pipe gas pipeline, which, starting from October 2022, is expected to receive up to 10 billion cubic metres of fuel per year to the Polish coast from the Norwegian shelf. The presented draft amendments are to facilitate the implementation of this project, which is crucial from the point of view of Poland’s energy security. At the same time, if we take into account the plans of the Polish transmission network operator to expand the terminal’s capacity to 7.5 billion cubic metres and create the Baltic Pipe, it may turn out that in just a few years’ time, on the theoretical level, Poland may abandon imports of raw material from the East.
Such an opportunity is also recognised by the project promoter, which is why the promoter points out the necessity of making changes to the Terminal Act in order to speed up the relevant investments, which should be completed in most cases by 2022, i. e. until the launch of the Baltic Pipe. According to the announcements of Gaz-System, by that time, 2,000 km of gas pipelines and five gas compressor stations are to be built, and investments are to reach PLN 11.5 billion. In addition, the General Meeting of Shareholders of Gaz-System approved in December the National Development Plan for 2018-2027, which defines the company’s new strategic investment programme. Its main axis is to implement the concept of infrastructure projects, which are part of the said Northern Gateway.
The completion of the aforementioned projects will give us a chance to break with the energy dependence that has been burdening our country for many years. The profitability of the Baltic Pipe is evidenced by positive results of economic tests and results of the second phase of the open season procedure, which showed the interest of the market in the implementation of this project. This opens the way to signing 15-year contracts. Let us remind you that last month PGNiG reserved 8.1bn m3 of capacity for the planned connection during the second open session phase. In accordance with the announcements of the Government Representative for Strategic Energy Infrastructure, „at the end of 2018 a transmission contract will be signed between Gaz-System and Energinet.dk.”
Socialization of Baltic Pipe costs
In the context of the Baltic Pipe, it is also worth noting that the amendments to the Terminal Act proposed by Piotr Naimski included a provision whereby Gaz-System could include the costs of operation and construction of the pipeline in the tariff to be charged. This would mean a way to socialise the costs of the project. It would be based on the principle that these amounts would be taken into account by Gaz-System in the so-called justified costs, which, in addition to the contractual capacity ordered for the duration of the tariff and the planned volumes of gas to be transmitted, would be included in the calculation of the tariff amount. According to the announcements of the company, the offshore part of the Baltic Pipe is to cost approximately PLN 1.8 billion, while the onshore part is to cost PLN 2.5 billion. The Polish and Danish parties, against the backdrop of speculation announced in the media, shared the costs of implementing the Baltic Pipe, which was discussed with BiznesAlert.pl in June last year by Paweł Jakubowski, Director of Development at Gaz-System.
Poland will not extend the agreement with Gazprom?
The proposed amendments to the Terminal Act are intended to serve one more purpose, which the author writes about in the justification to them. It is related to the possibility of securing gas supplies from alternative sources to the Russian sources. In this context, it has been pointed out that the import of raw material to Poland is carried out mainly on the basis of the so-called Yamal contract signed in 1996 and reviewed in 2010. It expires in 2022, i. e. at the moment when the Baltic Pipe pipeline is scheduled to be put into operation. The subject of the future of the agreement with the Russians raised the temperature of political discourse in Poland, as described more broadly by Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl. As we read in the impact assessment to the Terminal Act, „as a consequence, it is planned not to extend the Yamal Contract, which will make it expire at the end of 2022.”
Is it possible to live without gas from Gazprom? As I wrote earlier, after the commissioning of the Baltic Pipe and the extension of the Świnoujście terminal, Poland could theoretically resign from the services of the Russian supplier. However, this does not mean that Warsaw completely excludes the raw material supplied from the Yamal Peninsula. Representatives of the Polish side emphasize that such cooperation is possible, but not based on the previous assumptions of the long-term contract. In addition, Gazprom must offer clear, transparent conditions, linked to a price that is not a result of the Kremlin’s administrative decisions taken under the influence of political animosity with gas consumers.
Nevertheless, the draft amendment to the Terminal Act is the first government document in which official information appears that Poland will not extend the Yamal Contract. So far, such announcements have only been made in the media space. Minister Naimski’s project has not yet been subject to social consultations and inter-ministerial arrangements. The final form of the act to be adopted is not known. However, ensuring Poland’s energy security requires rapid and effective action.