Poles want to end the history of disputes with Gazprom. The gas contracts with Russia will expire soon, but the Polish section of the Yamal gas pipeline will stay. It is to be used for efficient transmission of gas around the country, including from the Baltic Pipe and the LNG terminal in Świnoujście. The Yamal is to be functionally connected to the Polish gas transmission system without the necessity to sign new contracts with Gazprom – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.
Polonization of the Yamal gas pipeline
The Polish state has already dealt with the seemingly insoluble problem of the Yamal pipeline (officially known as the Yamal-Europe gas pipeline) by giving Gaz-System control over its capacity. In 2019 the EuRoPol Gaz company, owner of the Polish section of the Yamal pipe, and the Polish TSO – Gaz-System did not reach an agreement within the set legal timeline on a new contract to entrust the operation of the pipe (the previous one expired on the 31st of December 2019). This was caused by a permanent stalemate at the Polish-Russian company, where PGNiG and Gazprom have a 48 percent share each, and 4 percent is owned by PGNiG Gaz-Trading. However, Polish lawmakers were prepared for such a situation. In line with the Energy law, to solve the problem, the contract that governs the operation of the Polish section of the Yamal gas pipeline, was determined by the President of the Energy Regulatory Office and entered into force on the 1st of January 2020. The new agreement significantly widened Gaz-System’s rights as an operator.
The end of the Russian contracts saga
Also in 2019, Poland’s PGNiG announced it had told Gazprom it would not extend the long-term gas supply agreement called the Yamal contract, beyond the 31st of December 2022, and has consistently stayed on message by reiterating it would not sign another deal of this kind. This means that as of 2023 the biggest company on the domestic gas market would stop buying about 3 bcm of Russian gas as part of the Yamal contract, which is now delivered to Poland via two entrances to the Yamal gas pipeline in Włocławek and Lwówek. The lack of a new gas supply agreement with Gazprom means PGNiG will no longer use the Yamal pipe to purchase the Russian gas. However, this does not mean that it won’t be possible for Russian gas to travel across Poland to Western Europe.
Transmission via Poland
In May 2020 the transmission contract between EuRoPol Gaz and Gazprom expired. It determined how much Russian gas was transported across Poland. On the 31st of December 2022, the EuRoPol Gaz-PGNiG transmission contract, which is related to the Yamal agreement, will end as well. This means that today the majority, and after 2022 the entire capacity of the Yamal gas pipeline will be made available only through auctions organized by the Polish TSO Gaz-System. The auctions are open for all interested parties. Today Russians use, and will be able to continue to use the Yamal pipe, but only on the basis of Polish and EU regulations, and on equal terms with other potential companies.
The plan to expand the Transmission System
At the same time, Poland’s TSO is planning to completely take control over the Polish section of the Yamal pipeline, including investments related to the domestic natural gas transmission system, and the process of determining the transmission tariff. This will be made possible by a new entrustment agreement that will replace the one that will expire on the 31st of December 2022. According to my scoop, a kind of an investment road map into gas pipelines in Poland will determine which investments are needed for Warsaw to be able use the Polish section of the Yamal pipeline for the benefit of domestic consumers, without the risk of engaging in toxic relations with Russia’s Gazprom. The plan is called the National Ten-Year Development Plan for the Transmission System for the Years 2022-2031, and it is being prepared by Gaz-System. The draft is to be published already this month.
The strategy, obtained by BiznesAlert.pl, says that Gaz-System wants to make technological updates to the Polish section of the Yamal, that will make it possible to use the pipe as part of the domestic transmission system. Reportedly the Plan includes, among others, the proposal to build a compressor station in Lwówek to pump the gas from the Baltic Pipe and the LNG terminal in Świnoujście into the Polish section of the Yamal gas pipeline. Then, if the gas transmission from Russia to Germany is halted, the imported gas will be transmitted to the eastern part of the country, where new exit points to Gaz-System’s network are planned. According to the schedule, these new points will start working once the hub and the compressor station in Lwówek are expanded. This will make it possible to transmit gas from the north via the hub in Lwówek to the Yamal pipeline to central and eastern Poland. Of course, by then the entry points to the domestic transmission system in Włocławek and Lwów will be launched. Today they are already enabling Polish companies to import gas purchased on the exchange in Germany, which is then delivered via a virtual reverse flow. If the gas transmission between Russia and Germany is maintained, it will still be possible to use the Yamal gas pipeline to cater to the needs of the domestic transmission system. The gas volume available for transmission from the Polish section of the Yamal gas pipeline will be maintained by Gaz-System at the current level, but from the point of view of the Polish system the pipeline will become more useful.
There won’t be a new long-term contract with Gazprom.
If it turns out that Russians will maintain gas transmission to Germany via Poland after 2022, it will be possible to deliver this fuel to the eastern parts of the country via the so-called virtual reverse flow. From a technical point of view, it will be possible to tap into the Yamal pipeline through the new entry points to the domestic transmission system in the east of the country, and the “shortage” that will be generated in this way, could be replenished with gas from the Northern Gateway – via the new entry point to the Yamal pipeline in Lwówek. This would make it possible to ensure that the volume on the border with Germany is the same as the gas received from Russia at Poland’s eastern border. This will be possible only if Gaz-System manages to make the necessary technical updates to the Polish transmission system without additional agreements between, e.g. PGNiG and Gazprom. By the way, it is worth reiterating that the planned Ostrołęka C power plant will receive gas in accordance with the conditions of the grid connection between Poland and Lithuania (GIPL). This means the gas for the plant will not come from the Yamal pipeline, because the GIPL will be tapped into Lithuania’s resources and Poland’s transmission system – the compressor station owned by Gaz-System in Hołowczyce.