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Russia’s invasion of Ukraine continues despite continued sanctions imposed by the West. It is necessary to reckon with the possibility that gas supply will be stopped either due to new restrictions, incidents or Russia’s decision. With enough effort and Poland’s participation, Europe is capable of abandoning natural gas. Saving energy and raw materials will be a measure of patriotism and solidarity with Ukraine – writes Wojciech Jakóbik, editor-in-chief at BiznesAlert.pl.
Russia’s invasion of Ukraine means it’s time to make Europe independent of Russian gas
Russia’s reprehensible aggression against Ukraine has changed the mood in Europe to such an extent that the German Minister of Economy and Energy Robert Habeck has announced the creation of state gas reserves and the construction of two LNG terminals in Germany, and former Polish prime minister Waldemar Pawlak, who only last winter defended the provisions of the Yamal contract with Russia’s Gazprom, today argues that the European Union can abandon gas from Russia. “An immediate cut off by the European Union of supplies of gas, oil and coal from Russia could be considered,” he told the Onet portal. It’s true. The Union can abandon gas from Russia with the right effort. An analysis by the Bruegel center in Brussels, published before the attack of the regime of Vladimir Putin on Ukraine, calculated that in order to abandon Russian raw materials, it would be necessary to ensure emergency supply from outside Russia and limit the consumption in households and European industry. Bruegel is right to point out that the transition period before the next heating season is not a problem, but the challenge is to gather adequate supplies for the next winter. Perhaps that is why the German federal government plans to spend EUR 1.5 billion on LNG purchases in order to accumulate an undisclosed volume, which, according to the declaration of Chancellor Olaf Scholz, is to provide up to 2 billion cubic meters a year. European and national solutions will allow Europeans to abandon gas from Russia if necessary, or survive if the Russians try to stop the supply themselves. This is an opportunity for political independence in the face of a further invasion of Ukraine. This also offers freedom to impose further sanctions against the regime of Vladimir Putin.
A wartime turbo-diversification
EurActiv.com acquired leaked information on the ideas of the European Commission on independence from Russia, the scoop reveals how far the EC will allow the member states to go. By 30 September 2022, the EC wants to fill at least 80 percent of European gas storage capacity. Gazprom has cut supply since the summer of 2021 and has brought supplies to historic lows where there was no obligation to store gas, raising suspicions that this action was part of preparations for the attack on Ukraine in order to paralyse the European response. In places with appropriate regulations, as in Poland, the gas storage facilities were customarily filled to the brim. Therefore, the Commission intends to propose an EU regulation obliging the accumulation of gas stocks at the limit mentioned above. In addition, the EC wants to ensure the generation of up to 35 billion cubic metres of biogas and the import of 10 million tons of green hydrogen by 2030, both of which are renewable gases that make Europeans independent of natural gas. The European Commission does not mention the development of nuclear energy, which will protect renewables instead of gas, of which, so far, more than 30 percent has come from Russia, but such are the plans of most member states. The countries that don’t have nuclear power, such as Greece, are hoping for importing it from places that do, such as Bulgaria. The European Commission has considered voluntary joint gas purchases in the past, but the draft seen by EurActiv.com does not mention that solution. Other steps are about developing renewables and electrification. “We are building new LNG terminals and working on interconnections between grids. But in the long run, it is our switch to renewables and hydrogen that will make us truly independent. We need to accelerate the green transition,” said the European Commission President Ursula von der Leyen. It is worth recalling that Poland is the largest beneficiary of the Connecting Europe facility (CEF) in the field of energy, having received over EUR 920 million (over PLN 4 billion) for gas and electricity projects in the last five years. The fact that EU priorities have been updated in the wake of Russia’s attack on Ukraine should be used to further effectively use the European resources, for example from the National Recovery Plan. This means the disputes between Brussels and Warsaw must be resolved to strengthen security of supply in Poland and the whole region of Central and Eastern Europe.
Poland has become a frontline country in the gas war, as I wrote in January 2022. Now it is becoming a country bordering the theater of hostilities in Ukraine. The Poland-Ukraine-USA gas cooperation has been in progress since at least 2017, when the U.S. government agency OPIC granted Ukraine’s PGNiG partner ERU a USD 38 million guarantee to purchase the first gas. Since then, gas supplies through Poland to the Dnieper have been growing. They will become of strategic importance with the progress of Russian forces in Ukraine. It is worth recalling that the largest gas storage facilities in Ukraine are located in the vicinity of Lviv located, at the time of writing this article, far from the front line. The intensification of talks between the Polish President and the Ministry of Climate and Environment with the US and Qatar suggests that some of the gas supplies from outside Russia may go to Poland, and possibly also to Ukraine. Warsaw has taken steps to maximize access to gas from outside Russia. The operator of Poland’s gas transmission network – Gaz-System intends to launch the Poland-Lithuania gas pipeline faster to enable deliveries of up to 2 billion cubic meters annually through the FSRU terminal in Klaipeda, Lithuania, already this spring. Adding submerged combustion vaporizers to the LNG terminal in Świnoujście will increase the capacity of the facility from 5 to 6.2 bcm annually, even before the planned expansion of the terminal to 8.3 bcm. Moreover, there has been a breakthrough in Denmark where the country’s Environmental Agency – DEPA, granted a new permit for the construction of the onshore part of the Baltic Pipe. This means the project will be completed in time to deliver 2-3 bcm of gas in October and 10 bcm by the of the year from Norway. The Poles have already given bank guarantees to PGNiG allowing the company to buy non-Russian gas safely despite the record prices caused by Gazprom. A special Governmental Agency for Strategic Reserves has been involved in this. Initially these solutions have not been welcomed in the EU, but Russia’s attack on Ukraine shows the validity of this step, which was also followed by Germany, often considered a model of energy policy. It is no accident that Poland and Lithuania are able declare their readiness to immediately abandon gas from Russia. Emergency supply, stocks and new infrastructure will make it possible, but Warsaw and Vilnius are waiting for the EU initiative on this issue.
It is no coincidence that deliveries have now started via the Yamal gas pipeline to Germany. European customers probably want to maximise the use of long-term contracts with Gazprom in case they are to be terminated by sanctions or for other reasons.
Every megawatt hour saved is a blow to Putin
After the initial enthusiasm of the public towards the war refugees from Ukraine, there will come the discouragement caused by the energy, economic and social crisis, which are already visible or to be expected due to the war just outside Poland. This cost is still smaller than a war with Poland, but there is a growing risk of Russia using high energy and raw material prices for disinformation. We have seen this already when fake news, denied by Polish institutions, about disastrous fuel shortages was disseminated across the country. From this point of view, in addition to the diversification of gas supplies, the economic patriotism of each Pole will be equally important. Every megawatt-hour saved means less pressure on prices and reserves and more room for manoeuvre by politicians responsible for responding effectively to Russia’s attack on Ukraine. For this reason, commitment to national affairs and solidarity with Ukraine should also be manifested in reducing energy and fuel consumption, for example by turning down the thermostats at homes. This will be easy today, but we must already prepare for the harsh winter of 2022, during which Poland and the European Union must be ready to abandon gas from Russia. The energy and military crisis of 2022 should motivate the West to abandon Russian gas, just as the 1979 oil crisis of the 20th century made it independent of Middle Eastern oil.
