Russia is threatening to use the Yamal pipe to get back at Poland

“The Russian newspaper Vzglyad commented on BiznesAlert.pl’s piece about the plan to subject the capacity of the Polish section of the Yamal gas pipeline to regulations. Russians are threatening Gazprom will take revenge in court and argue that the Polish plan is an argument for Nord Stream 2. This is just a swan song, because the old will not come back,” writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

A Polish energy empire?

Gaz-System wants to take over the Polish section of the pipe from EuRoPol Gaz and then modernize it to deliver gas from the LNG terminal and the Baltic Pipe to the east, a plan BiznesAlert.pl reported on first.

Vzglyad argues that Poles will want to make those changes against Gazprom’s will. The Russian Institute for International Political and Economic Strategies – RUSSTRAT claims that the Russian company will be able to demand compensation, and if that fails, will go to court. This would be an opportunity to get back at Poland after PGNiG won with Gazprom at the arbitration court, and received over six billion Zloty of overpayment for a hiked-up gas price. Poles are planning to end the Yamal contract with Gazprom at the end of 2022, and not sign an analogous one in the future. Consequently, Gazprom’s impact on the Polish market will dwindle so significantly that the political abuse that took place in the past will no longer be possible. Nevertheless Russians will still use the available tools to pursue their short- and long-term goals, and it looks like the looming dispute over the Yamal gas pipeline is in their toolkit.

“Nord Stream 2 may become even more important for Russia than originally planned. It is a protection against the risk the gas transmission across Ukraine entails, and it may also be a safeguard in case of any problems with transmitting Russian gas via Poland,” Vzglyad writes. The newspaper alleges that Poland wants to build an “energy empire”, because it’s planning to build a gas hub and “arbitrarily manage” the capacity of the Yamal pipe on its own territory. The authors write about the Baltic Pipe project in this context. The construction of the offshore section has already started and it is to be completed in 2022. They also elaborate on the plans to connect the import infrastructure – the gas pipe from Norway, the LNG terminal and the potential FSRU in the Bay of Gdańsk – with the Yamal pipeline in order to distribute the gas across Poland. “Poles may redesign the way the Yamal pipeline works either with Gazprom’s permission, or without it,” the RUSSTRAT says. The Institute speculates that Poles could demand that Russia give up control over the Yamal pipeline as part of additional compensation for the overblown gas price, or that it would use the Office of Competition and Consumer Protection that questions the right of western companies to finance Nord Stream 2, but does not have any basis to make such claims.

However, the fact is that the Yamal pipeline capacity in Poland is already made available at capacity auctions in line with EU regulations, whose implementation Gazprom had been blocking for years. The polonization of the Polish section of the Yamal gas pipeline by the Polish TSO Gaz-System, which will need to take control over the infrastructure and add it to the regular operation of the Polish transmission system, will not change that. It is worth reminding that the pipeline is operated on the basis of a mixed formula, which goes against EU regulations, which enforce ownership unbundling between the operators of infrastructure and gas providers. The EuRoPol Gaz’s shares are split in half between PGNiG and Gazprom, which is both a recipe for a stalemate and a historic relic, an issue we wrote about previously on BiznesAlert.pl.

Gazprom’s swan song

Since the idea of filing a lawsuit with regard to the Yamal gas pipeline has emerged, we should expect the topic to come back after 2022. Since Nord Stream 2 has been mentioned, we should be ready for Russians to use the dispute over the Yamal as an argument for the contentious pipe to Germany, which may be used in case the conflict over its construction drags on, but also if the construction works are delayed even until 2024, which is possible according to some analysts. Still, Poland follows EU regulations, which are a protective shield against Gazprom’s abuses. The polonization of the Yamal gas pipeline will, in a way, put an end to the dispute about this pipe, and in a wider context to the arguments over the contract terms for supplying Russian gas to and across Poland. Despite the fact that it may lead to Russia taking revenge, the polonization will make it possible to finally normalize the operation of the Polish gas transmission system, which will cease to be under Gazprom’s influence. All that will be left is for pro-Russian outfits in Poland to try to convince the public opinion that Warsaw should give up on its plans.

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