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Poland Seeks To Become EU’s Gas Hub

Natural Gas

There’s no holding Poland back. A little over a month after it began to divest itself of reliance on Russian gas by taking ownership of the first U.S. shipment, the country’s president has declared that he wants to make Poland an energy hub capable of distributing gas across the EU.

Speaking after a meeting with the U.S. president, Andrzej Duda told reporters: “Can we become a hub through which American LNG gas will flow to central Europe? I am convinced the answer is yes.”

Since 1996 Poland has been getting the vast majority of its gas from Gazprom. But with that contract expiring in 2022, Poland is keen to diversify. The agreement sees the state-run gas firm PGNiG buy up to 10.2 bcm of gas per year. The total consumption is around 15 bcm. But in anticipation of a change Poland built its own liquefied natural gas terminal and plans to build a pipeline to the North Sea. In June, the first shipment of LNG arrived from Cheniere Energy Inc.’s Sabine Pass plant in Louisiana.

Poland is part of the Three Seas Initiative, a collection of a dozen eastern and central European nations around the Black, Baltic and Adriatic seas. They are highly dependent on Russian gas and therefore at its mercy. In 2008 Russia cut supplies of LNG to Europe over the Ukrainian dispute. Duda says the initiative’s long-term aim is to formally diversify energy supplies to reduce that dependence on Russian oil and gas. He said: “This (first shipment) opens a path to more contracts I hope that in the near future there will be a long-term contact entered into for LNG gas deliveries from the U.S. and through this, we will diversify sources of supply of this hugely important raw material to Poland.” Related: Goldman: Oil Prices To Fall Below $40 If Shale Doesn’t Slow

The Trump administration is keen to move into this space. Prior to the G20 when President Trump stayed in a room for meetings and didn’t ask his daughter to fill in, he discussed increasing trade, infrastructure and energy ties with representatives from the Three Seas Initiative. He told them: "Let me be clear about one crucial point. The United States will never use energy to coerce your nations, and we cannot allow others to do so.” Naming no names, he went on: “You don't want to have a monopoly or a monopolistic situation."

Supplies of natural gas is something the U.S. is not short of. The Cheniere Energy Sabine Pass terminal is currently the only terminal in the lower 48 states which can export but the country is now building new ones. Trump is eager to find his place on the world stage and provider of U.S.-sourced energy would fulfil not only that need but also meet his demand that the US reduces its trade deficit.

A strong tie with the US would also be beneficial to Poland which is keen to have its support to block the Nord Stream gas link which runs from Russia to Germany. There are fears in Warsaw that Gazprom could turn off the taps to Poland without impacting other west European customers.

However having learned from the past, Poland does not plan to run headlong into another long-term contract with a foreign power. “We will be aiming at a situation where a long-term contract becomes a thing of the past,” said Poland’s energy official Piotr Naimski. “If the price of Russian gas is competitive enough we do not rule out buying it, but definitely not as part of a long-term contract.”

By Precise Consultants

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