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Poland Says EU Going Soft On Gazprom Market Abuse

Gazprom

Poland is threatening to use all legal means possible to block the settlement, without fines, of an antitrust investigation targeting Russian Gazprom, which it feels the European Union is going soft on.

On Wednesday, Polish Foreign Minister Witold Waszczykowski said the country would use “all legal means” to block the EU’s terms for closing an anti-trust investigation into Gazprom.

The Polish foreign minister’s statements are in direct response to comments from EU competition regulators the day before, saying that because of the market abuse charges against it, Gazprom had made enough concessions.

Poland—along with other Eastern European countries—disagrees. They think Brussels is treading too lightly with Russia on gas.

The EU proposal would call for Gazprom to get rid of supply terms that prohibit importing countries from re-exporting Gazprom gas to third parties. That was a major sticking point.

The EU’s proposal would also see Gazprom link gas contracts to investments in pipelines.

Finally, it would ensure more equitable gas pricing for Estonia, Latvia, Lithuania, Poland and Bulgaria. These five countries are particularly sensitive to the Gazprom deal because they have almost no alternatives to Russian gas.

"We believe that the Russians will use their supplies as an instrument of political influence," Waszczykowski told reporters, adding that “it's a pity that our idea has not found an understanding in the European Commission.”

Related: Deciphering Today’s Oil Markets

Poland is seeking EU fines against Gazprom, not merely concessions for its abuse of the market.

Polish state-run energy company PGNiG has threatened to take the European Commission to court, and is calling the Monday settlement “highly insufficient”.

Our initial assessment shows that the commitments are insufficient to remove the negative impact of Gazprom competition breach in the CEE markets, including Polish market,” PGNiG chief executive Piotr Wo?niak told the Financial Times.

They may not make any significant contribution to change the situation that triggered the Commission action in 2012. We consider the Commission’s acceptance of those commitments as highly insufficient.”

By Damir Kaletovic for Oilprice.com

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  • JHM on March 16 2017 said:
    "Finally, it would ensure more equitable gas pricing for Estonia, Latvia, Lithuania, Poland and Bulgaria. These five countries are particularly sensitive to the Gazprom deal because they have almost no alternatives to Russian gas."

    These countries need to follow the lead of Australia and massively build up electrical storage. Ukraine will likely go this way too. Ukraine has developed substantial wind resources, adding batteries and other storage to this will provide the flexibility needed to ease dependency on gas.

    The alternative to expensive gas is cheap batteries. Tesla is leading the way offering 100MWh+ systems at $250/kWh. This pricing is offered to all countries.

    Batteries source the lowest cost power however it is produced. So it optimizes use of base load coal and nuclear as well as harvesting cheap wind and solar. They also optimize the use of transmission lines and power imports. Batteries displace the need for gas plants used for load following and peaking.

    The scale needed to impact gas prices is much less than the scale needed to replace gas. When Russia understands that countries like Poland and Ukraine are committed to building up storage, it will come back to the negotiating table and offer better terms. Russia is sitting on massive long term asset. An aggressive batteries build out can leave these assets economically stranded. Thus, Russia must accept better terms for long-term gas contracts or else it will ruin its long-term investments. So commitment to an aggressive build up with a few nearterm projects will quickly give Poland and any other country the upper hand in negotiation.

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