GAS LNG 26 July, 2022 12:00 pm   

Poland should help Germany with gas, but also make demands

baltic pipe rury gazociąg gaz system Source: Gaz-System

Germany got hooked on Russian gas at its own doing. However, it is in the interest of the entire EU, including Poland, to help it become independent of this source. The latter has the right to expect help in return, because that’s how European solidarity works to benefit the entire continent, Russia excluded – writes Wojciech Jakóbik, editor-in-chief at

A wise Pole before the event. A wise German after the event, but with a small caveat.

Time and again it is worth repeating that Germany became dependent on Russian gas, which covers a third of its 100 bcm demand, at its own request. Berlin bet on “cheap” gas from Russia, which ultimately turned out to be extremely expensive politically and economically. Gazprom has been fueling the energy crisis since the summer of 2021, and Europe is vulnerable to its intrigues, among other things, due to Germany’s flawed policies. All of this is correct. However, it looks like Berlin has learned its lesson. While this statement may not apply to the entire government full of pro-Russian politicians from SPD, the change is definitely palpable at the Ministry of Economy and Climate led by the Greens’ Robert Habeck. The lawmaker agreed to revise the plans to shut down Germany’s remaining NPPs in 2022, and decided to invest in five LNG terminals, including a few FSRUs in 2022/23, so that his country could break the dependence on Russia. However, this rethinking comes late – only after Russia’s attack on Ukraine in February and just before the heating season, in which Germany may run out of gas, and therefore need European solidarity regulated by the SOS regulation on security of gas supply. Poland, which, if everything goes according to plan will have the ability to become fully independent from deliveries from Russia with the help of physical imports through the finished LNG terminal and the Baltic Pipe planned for the end of the year, can help, and EU regulations describe how to do this. This has caused controversy in the political debate in Poland, so it is necessary to talk about facts to decide what to do. Germany needs help from Poland and vice versa.

The more gas we save, the better

First, it is worth pointing out that the SOS regulation stops working when vulnerable consumers might be affected. Aid based on the principle of solidarity must not come at the expense of recipients such as schools or hospitals. However, it is worth noting that among the bilateral agreements on cooperation in the event of a gas supply crisis, there is no agreement between Poland and Germany. The Poles do not want to sign such an agreement yet. Nor do they support the European Commission’s idea of making it compulsory to reduce gas consumption in order to save resources. spoke to officials in the government and gas companies who claim that the demand for gas in Poland has fallen due to the energy crisis, so there will be no need to reduce supplies to businesses or households. Unofficially, however, some admit that this may happen and if it does we will “at worst, reduce gas supply to businesses”. In my opinion, gas consumption should be reduced now, in order to have more reserves in the event of a pan-European supply crisis. This has been already taken into account by the Commission, which has replaced the N-1 ratio, which indicates a lack of supply via one route, with the S-1, which describes a lack of supply from one country, Russia by default. It is necessary to take into account a scenario in which there will be problems with deliveries from outside Poland. Warsaw intends to rely not only on the LNG terminal and Baltic Pipe contracted to the maximum, but also on the reverse on the Yamal pipeline (deliveries from the German stock exchange) and the Poland-Slovakia pipeline (physical deliveries from southern LNG terminals and Azerbaijan). These sources may dry up in the event of a complete cessation of gas supply from Russia. Then Poland may run out of gas as well.

A system of interconnected vessels in crisis

However, even if there is no shortage, there must be solidarity in the gas market towards Germany and others in need within the framework of the regulations that we have fought for ourselves in the past. It is worth recalling that the revision of the SOS regulation of 2017, introduced thanks to Poland’s efforts, was intended to ensure the priority of gas supplies to our vulnerable customers from the German warehouse Katharina (named after Catherine the Great) under the control of Gazprom at that time, in case of a gas crisis anticipated in Ukraine. In the event of a supply crisis in Poland, gas was to flow as a priority through the reverse on the Yamal gas pipeline to vulnerable customers, protecting Polish households from shortages. As it happens, the current situation may make the same rules protect households in Germany thanks to Poland’s potential ability to provide gas via the same Yamal, which was emptied by Gazprom when the company terminated the Yamal contract in May 2022. However, some say that Germany created this problem on its own, so we should not help it. This is demagoguery that falls on vulnerable ground at a time of an energy crisis that is lowering the standard of living across Europe and reducing the appetite for solidarity. Politicians have their licentia poetica. “How should the Polish government react “to the German blackmail” to share gas?,” Jarosław Kaczyński (leader of the ruling party in Poland – ed.) was asked at a meeting with party activists. “With a laugh,” he replied. Let us hope that our western neighbors do not react in the same way to any attempts to coordinate the supply of coal to Poland via German ports, which I have been writing about since the spring, or when energy imports from the German market will again balance the shortfalls. Our markets are a system of interconnected vessels and we depend on each other.

The sooner we save, the better

However, it is solidarity that will help to mitigate the impact of the crisis on the economy and to get out of the coming gas crisis more quickly. The International Monetary Fund has calculated that the lack of gas supplies from Russia will hit hardest the economic growth of countries that relied on “cheap” raw materials from Vladimir Putin. The GDP decline in Viktor Orban’s pro-Russian Hungary may reach more than 6 percent, in Slovakia and the Czech Republic, which work as Russian gas pumping stations with no real impact on the market outside of tariffs, the GDP decline may reach more than 5 percent. Incidentally, this may be the reason for the advances of Hungary’s Foreign Minister Peter Szijjarto, who again went to Moscow to ask for an additional 700 million cubic meters of gas, and was told the Kremlin would consider the request. Hungary’s dependence on gas from Russia may cause a crisis in case the tap is turned off on Europe. The same may happen in Italy, whose energy sector depends on Russian gas. Germany may record a drop by 3 percent, and Poland by about 2 percent. However, the IMF recommends energy policy coordination to mitigate this impact, particularly through the resource savings proposed by the European Commission and the coordination of gas purchases from outside Russia. “Governments need to step up their efforts to secure supplies from the global LNG market and alternative sources, further remove infrastructure bottlenecks to import and distribute gas, plan to share reserves in the event of a crisis and encourage energy savings while protecting vulnerable customers, and develop gas rationing programmes,” the IMF recommends. Such actions can reduce the impact of the cessation of gas supplies from Russia on the European economy. Thanks to them, the GDP decline caused by Putin cutting Hungary off gas would fall to 3 percent, in the Czech Republic, Italy and Slovakia to 2 percent, in Germany and Poland to about one percent. The gas market in Europe is a system of interconnected vessels, so a supply crisis at our neighbor’s means at least higher prices and a blow to the economy in our country. Finally, it is worth recalling that Germany is the main trading partner of Poland, and our country is the fifth partner of the state of Olaf Scholz. In the 2021 crisis year, we sent over EUR 69 billion worth of goods across the Oder river, and we brought EUR 78 billion euros worth of goods here. These figures are likely to be higher in 2022, unless they have been already hit by the recession. An economic crisis in Germany would also mean a crisis in our country. Sharing resources in the face of a gas supply crunch is a classic win-win situation, which in an optimistic scenario, will end in independence from Russia for the sake of a common foreign and security policy.