Polish PGNiG and American ERU Management Services will together look for gas in Ukraine starting with a new gas well near Lviv in 2022. On the 30th of August, the companies signed a contract to this end. Jarosław Mudry, managing partner at ERU, talked to BiznesAlert.pl about the deal.
BiznesAlert.pl: After so many years of preparations, what made it possible to finally sign the contract?
Jarosła Mudry: It was a long process. We’ve started cooperating with PGNiG when the gas market in Ukraine was only starting to grow. We’ve been contributing to its development by signing new agreements, and in the meantime the liberalization that had started in 2015 was going on. Today we have formal foundations for cooperation. Six-seven years of cooperation between PGNiG and ERU is a very long time from the point of view of the gas market. As at today we have already transferred over 3 bcm of gas to Ukraine since 2016. The transit included a number of dedicated LNG deliveries that arrived at the Dnieper River.
How did these contracts work?
They included clauses on the origin of the gas – it had to come from American LNG sources to Poland. We signed agreements on deliveries by PGNiG, which ensured their right origin by ordering the gas from America.
Is it possible to up the amount of such deliveries?
It won’t happen this year. LNG deliveries are about pure trade. Before the coming winter, Ukraine filled up its gas storage facilities. This summer Kiev imported relatively little gas. However, I am sure that next winter deliveries via Poland will play an important role in ensuring the security of supply to Ukraine. I believe we are reaching a point where energy security will again play a bigger role than the market rules in the coming years.
How important is it that gas prices in Europe are record high right now?
The market is overheated and the stock market is reacting emotionally. It is apparent that the market participants are nervous. A few week ago, one, false piece of information about Nord Stream 2 having launched caused a price drop. After that the price went up again, but half as much as previously. Therefore, the market remains very volatile, which means the security of supply will play a bigger role, for instance from the point of view of Ukraine, which will fight for it more, than for favorable economic conditions. Kyiv will want to prove that its market is working, and that foreign companies should not be concerned about storing gas on its territory.
Will Nord Stream 2 play an important role in this context?
This does pertain to Nord Stream 2, as well as the future of gas transmission via Ukraine, once the transit contract with Gazprom ends in 2024. This is also about the future of transmission via Poland. These are the key topics, and we are proud we have contributed to positive outcomes in this regard.
Can ERU and PGNiG be part of the solution?
Of course. We are looking for ways to expand our cooperation. The recent years have shown we can be successful together.
Interview by Wojciech Jakóbik