“Rzeczpospolita” reports that Poland is buying more and more coal, gas and oil from Russia. It is worth looking at the reasons for this. This is not the triumph of Vladimir Putin, because some changes are unstoppable. However, some of them should happen faster – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
The newspaper reminds that PGNiG increased its imports from Gazprom by 6,6 percent, although the company is arguing that the share of Russian gas in imports is falling, as it recorded an even greater increase in imports from outside Russia. The increase in LNG imports compared to gas from Russia was also higher in terms of quantity. In January-July 2018, PGNiG imported approximately 0,6 billion cubic meters more LNG than in the corresponding period of 2017 – thus, this import was 60 percent higher than in the same period of 2017. On the other hand, gas imports from Russia in the period January – July 2018 increased in comparison with the analogous period of 2017 by less than 0,4 bcm, or only by about 6 percent – the company says.
This means that PGNiG imports more gas in general, and imports from Russia are responsible for part of the growth, which probably pays off more during the period of lower oil prices on which the Iraqi contract depends. It is worth recalling that Poles can not go down with imports below the minimum level designated by the take or pay clause, which enforces a fee for about 80 per cent of the volume of the contract regardless of their needs. The situation will not change until 2022, when the current contract will be terminated. The government declares that it will not want a similiar agreement with Gazprom. The attractiveness of the Russian offer makes it reasonable to leave the possibility of signing a new gas contract with the Russians, but on better and more flexible terms.
In turn, Grupa Lotos signed a new contract with Rosneft, which will satisfy up to one fourth of the Polish company’s demand. BiznesAlert.pl quoted Rosneft’s announcement about the contract. Lotos and Rosneft have signed a contract for deliveries to Poland from 6,4 to 12,6 million tons of oil by 2020. Kommersant reminds that Poles diversify sources of raw material supplies. In the first quarter of this year, 39 percent of Lotos Group’s oil came from directions other than Russian – BiznesAlert.pl reported. This means that although Lotos signed a new contract with Rosneft, the dependence on Russia is falling. A similar phenomenon was observable at the end of 2015, when despite signing a futures contract with Saudi Aramco, PKN Orlen extended the contract with Rosneft, which I wrote in the text under the intentionally provocative title: “Did PKN Orlen betray Poland with the Russians”. Poles will still need oil from Russia, but thanks to diversification they get better conditions. It could be similiar in the case of Lotos.
The limitation is that the Russian blend is needed for Poland to obtain specific products. The replacement could be theoretically Iranian oil, but the path to significant development of imports from this direction is closed by the specter of the US sanctions’ return in November this year, which dissuaded Poles from talking about a long-term contract that was already communicated. From this point of view, the decision of President Donald Trump to leave the nuclear agreement was unfavorable for Poland, as I wrote about in BiznesAlert.pl.
Meanwhile, Rzeczpospolita reminds that from January to May this year Poland has already imported 5,1 million tons of Russian coal, which is twice as much as in the same period a year earlier. This is confirmation of the information described in BiznesAlert.pl last week. Poles paid even one billion PLN for Russian coal. Also, Dziennik Gazeta Prawna reports that this import even included deliveries from the occupied Donbass, which is politically problematic in the face of Poland’s firm attitude towards Russia’s aggression in Ukraine.
As I wrote in the past, I consider dependence on coal from Russia to be proof of the need for further reform of the Polish coal sector. The import of cheap Russian raw material is growing due to the fact that our sector is not able to provide an attractive alternative. The current coal price hike did not speed up the reform, despite numerous appeals at BiznesAlert.pl, but even slowed down the changes. Now coal is to be cheaper, due to the drop in demand in China, and our companies are still not able to find themselves on the market. The results of coal imports from Russia are another premise for the radicalization of changes in Silesia. It will be difficult for them in the face of local government elections.