by Wojciech Jakóbik

Wintershall and Warsaw in a row over the future gas supplies from Nord Stream 2

According to the Russian news agency Sputnik, Ties Tiessen, a board of the German company Wintershall (a subsidiary of BASF), declared that Poland requested   11 billion cubic meters (bcm) of gas annually from Nord Stream 2. Consequently, he added, Warsaw would not block the Nord Stream 2 project, as that would provide Warsaw with gas.

“So why should this project, which would give Poland gas it is interested in, be blocked by it?”,  asked Tiessen, who also added that the discussion on the project was highly politicized, but he expects a positive decision on establishing the Nord Stream 2 consortium by the Polish Office of Competition and Consumer Protection (UOKiK). In December 2015, UOKiK received an application from six companies to form a joint venture called Nord Stream 2 AG, responsible for the construction and operation of Nord Stream 2. In February 2016, the Polish antitrust regulator announced that it extended by four months its decision related to the Nord Stream 2 joint venture. UOKiK’s decision upon the Nord Stream 2 joint venture is expected to be announced in August. A similar application was addressed to the German competition office, Bundeskartellamt, which has already approved it.
The goal of the Nord Stream 2 project is to construct a new gas pipeline across the Baltic Sea that would double the existing gas transfer to 110 bcm a year. The consortium, which holds the same name as the gas pipe, was created by Gazprom (50% share), Wintershall, Engie, Shell, Uniper (a subsidiary of E.ON) and Shell, each -10%.

Nevertheless, both the Polish energy minister and Gaz-System, the gas transmission system operator, vehemently denied Tiessen’s statements over Poland’s gas request from Nord Stream 2. Actually, Warsaw has firmly voiced its disinterest in any gas deliveries from Nord Stream 2 and it has repeatedly and officially criticized the project. Thus, Piotr Naimski, the Polish government’s Plenipotentiary for Strategic Energy Infrastructure, declared that the Nord Stream 2’s gas may reach Poland through western and southern connections, but Poland is not interested in receiving gas supplies from this project.  In order to create an alternative not only for its own market but for the whole region, Warsaw is planning to continue its energy diversification, to expand the gas terminal in Świnoujście and to build the Norwegian Corridor.

The above 11 bcm figure, presented by the member of Wintershall’s board, was based on an initial market study conducted by the German operator Gascade, which researched whether market players in Central and Eastern Europe will be interested in gas supplies delivered via the EUGAL pipeline, which is yet to be constructed. This pipeline is set to deliver gas from Nord Stream 2 to the Czech and Polish markets.  The research showed that the Czech market could absorb 51 bcm of gas a year, while the Polish market could get Poland11 bcm of gas annually. The survey was preliminary and encompassed all entities that could be interested in buying the gas transported by Nord Stream 2. Usually, in such circumstances, the participants provide the operators with the maximum possible figure, aiming to reserve as much capacity as possible. Later, the figures are verified and, actually, the purchases are lower than the initial estimations. Very oddly, it is not yet known which stakeholder reported, from the Polish side, the amount of gas demand. Furthermore, the representatives of the Polish government and PGNiG, the state-owned oil and natural gas company, are concerned about  the implementation of the Russian plan, as in such scenario, the gas imports from Nord Stream 2 may  be taken over by companies that cooperate with Gazprom in Poland. In such case, these companies would buy the Russian gas, despite if Warsaw’s opposition to the controversial pipeline.

 Ahead of Polish antitrust regulator’s decision over Nord Stream 2 joint venture, Gazprom is luring the extension of gas contract

EUGAL’s first branch is to be opened in 2019, the year when the agreement on the gas transit from Russia to Germany and other countries via the Polish section of the Yamal pipeline will end. In this regard, it is worthy of mention that at the same time with the Wintershall representative’s claims over Poland’s interest in Nord Stream 2 gas, Gazprom’s Deputy Chairman of the Management Committee, Alexander Medvedev, suggested that Poland should prolong the transit agreement with Russia, which is set to expire in 2022. Gazprom offered to extend the contract by 25-30 years, but Warsaw, which, according to Medvedev, “is harming itself and annoying Europe”, has not answered to Russian proposal.  Previously, the Polish government had announced that it will not extend the long-term contract for gas supplies with the Gazprom.

The Russian daily Kommersant reported on the meeting between Poland’s Prime Minister Beata Szydło and Chancellor Angela Merkel that took place on 22 June in Berlin. One of the subjects was the controversial Nord Stream 2 project that Germany doesn’t want to abandon. The Polish Prime Minister declared that Nord Stream 2 “divides Europe”, whereas the German Chancellor held up her earlier stance that this is a “purely economic project that should be pursued in accordance with the EU law”.  For Poland, Nord Stream 2   would lead to further expansion of Gazprom in the Eastern and Central Europe, would weaken Ukraine and also threaten the energy diversification strategy, including projects as the gas terminal in Świnoujście. Kommersant argues that unlike Poland, Slovakia took a constructive position towards Nord Stream 2. When Merkel visited Bratislava, Prime Minister Robert Fico informed her that if Slovakia, because of Nord Stream 2, would lose its transit profits from its connection with the Ukrainian transit, then “some form of compensation” would be expected. This may take the form of including Slovakia in the Nord Stream 2 /EUGAL gas deliveries. But the Russian newspaper emphasized as well that Poland’s position is very important because by Gazprom, Wintershall, Engie, Shell, Uniper and Shell are not legally yet the shareholders of the Nord Stream 2 consortium, as the Polish antitrust regulator has not yet issued its decision.

 Gas supplies and gas contract: which assessment and which stance for Warsaw?

In the end, how should be assessed the claims over Poland’s request on Nord Stream 2 gas and Gazprom’s proposal for gas contract’s extension?  Most likely, as new justifications to prop up both the rationale of Nord Stream 2 and the project’s case-building.

Hence, if the Poles refuse to extend the transit agreement with Gazprom, they might be accused of blocking the existing supply route. This stance may be used by the proponents of Nord Stream 2, especially by Gazprom, as a ground base to search a new supply route, which most likely would be Nord Stream 2/EUGAL. Therefore, Warsaw may be deprived by some of its arguments against Nord Stream 2. Furthermore, Poland may be easily depicted and perceived as an irrational actor, a deal-breakers of possible profitable business contracts between some Member States and Russia. After all, if Poles do not prolong the contract, what arguments will they have to question an alternative gas route across the Baltic Sea? This is Moscow’s plan to isolate the country whose opposition mobilized other Central and Eastern states to block Nord Stream 2.

The participation of Wintershall in this tactical maneuver is highly disappointing not only because it does support the Russian propaganda over the Nord Stream 2, but it helps to create the impression that Poland is against any Russian propositions as a rule, even if it goes against its own interest. Aside the attempt to create confusion over the Warsaw’s intentions and to weaken the Central and Eastern countries’ opposition to the project, the ultimate goal is to picture the current Polish government as a disoriented huddle that is frantically attacking the Russian pipeline. Warsaw’s response must be calm, resolute and fully in line with its energy security goals.

 

Wojciech Jakóbik is energy analyst and Editor in Chief of BiznesAlert

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