Why didn’t Poland panic when Russia cut off gas?

The first two European countries to have their gas cut off by Russia

Polish Prime Minister Mateusz Morawiecki reassured lawmakers in the National Assembly on April 27 that the Russia cuts off gas “will not affect households, will not affect Poland”.

According to Bloomberg, Mr. Mateusz Morawiecki’s confidence can be traced back to more than a decade of Polish efforts to diversify energy sources away from Russian ones. This process has been accelerated since the long-term gas supply contract with Russia’s Gazprom is coming to an end.

However, the reassurance of the Polish leader depends on whether infrastructure projects are completed in a timely manner and if Poland’s neighbors can help fill any gaps. missing or not.

Poland currently consumes about 20 billion cubic meters of gas per year, including between 8.5 and 10 billion cubic meters from the Yamal pipeline from Russia, which was closed on April 27.

The rest of the energy to meet Poland’s needs comes from LNG storage capable of importing 6.5 billion cubic meters and producing about 3.8 billion cubic meters domestically.

Poland’s gas storage facilities are now 76%, containing an additional 2.4 billion cubic meters.

The European country that has just been cut off by Russia can make up for the upcoming shortfall through a Baltic pipeline from Norway. However, this pipeline with a full annual capacity of 10 billion cubic meters will not be operational until 2023.

In addition, Poland has smaller routes with its Central European allies, including Lithuania, Slovakia and the Czech Republic. And Warsaw can get gas from Berlin.

However, these options may not be enough, Bloomberg notes. Although the gas producer Norway is intended to pump to Poland, other suppliers that rely on imports can raise prices as well as there is uncertainty about the instability of the war between Russia and Ukraine.

According to MBank analyst Kamil Kliszcz, with the scenario of the European gas market tightening and the inability to move US LNG to Germany or to the Baltic pipeline, Poland may not be able to get 3 billion cubic meters of gas. .

As the European Union’s most coal-dependent economy, Poland is also building gas-fired power plants to help it cut carbon emissions.

That could boost annual gas demand by 30 billion cubic meters over a decade, further straining supply and possibly slowing the transition away from this fossil fuel.

Russian energy group Gazprom on April 27 stopped supplying gas to Poland and Bulgaria for not paying for gas in rubles. “Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG (Poland) due to non-payment in rubles,” Gazprom said in a statement.

Claim gas payment in ruble was central to Moscow’s response to Western sanctions.

Poland and Bulgaria are the first countries to have their gas cut off by Europe’s main supplier since the war in Ukraine on February 24, Reuters reported.

Warsaw and Sofia said the shutdown was a breach of the contract of Gazprom – the world’s largest natural gas company.

Gazprom, which supplies about 40% of Europe’s gas needs, also warned that transit through Poland and Bulgaria – where pipelines supply Germany, Hungary and Serbia – will be cut off if gas illegally smoked burning.

Reuters reports that cutting gas to Poland and Bulgaria is one of Russia’s most important moves in the gas market since the Soviet Union built a gas pipeline from Siberia to Europe in the early 1970s. .

Gas prices Europe surged on April 27 after Russia cut gas to Poland and Bulgaria.

Reminder for Europe

According to Bloomberg, data from network operator Gascade shows that gas orders from Germany to Poland via the Yamal-Europe pipeline spiked on April 27.

“Any buyer who declines the new payment procedure runs the very clear risk of a supply cut,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies.

For now, the focus has shifted to other parts of Europe, especially in Germany and Italy, major importers of Russian gas.

Data from the operator shows that shipments through the Nord Stream pipeline to Germany were little changed, running at the full capacity of the pipeline. Russian gas orders over Ukraine disconnected again. Foreign Minister Peter Szijjarto said the process of transporting gas to Hungary was going according to plan and the country had thought of a way to pay Gazprom.

In Poland, the contract for PGNiG is 10.2 billion cubic meters a year, equivalent to 50% of demand or 60% of imports, and the country does not currently have the capacity to replace this volume, Jefferies Group said. .

According to analysts at Goldman Sachs Group led by Ms. Samantha Dart, the gas cut Russia to Poland and Bulgaria “slight material impact” on the gas balance in northwest Europe. It does, however, pose the EU’s concern as to whether the new gas payment system would breach sanctions and thus potentially increase market volatility.

On April 26, the Polish government said it had enough fuel in reserve to withstand supply disruptions. Bulgaria has secured gas for at least a month, the country’s energy minister said. This month is also the end of the heating season in Europe, which reduces the need for immediate gas supply, but buyers are also starting to buy to store for next winter.