Poland to become a gas trading hub, while Russia turns to China

Gas and EU
Source: DollarPhotoClub

In an attempt to free itself from relying on Russian gas imports, Poland has announced that it’s planning to build a gas trading and transit hub in Central and Eastern Europe – EurActiv reports.

As the largest economy in Central Europe, Poland is already working on building 2,000 km of pipelines delivering gas to all corners of the country within the next ten years. It also intends to build a north-south corridor stretching to Croatia, as well upgrading gas links to Lithuania allowing it to re-export gas to the Baltics. In April, Poland expanded a station on the border with Germany with a reverse flow capacity of 2.3 billion cubic metres annually (bcm/y) and the potential to rise to 5.5 bcm/y in case of supply disruptions.

But by far the most important development is the construction of a Polish LNG terminal in Swinoujscie. Scheduled to be completed later this year, the terminal will receive oil-indexed gas supplies from Qatar, but two-thirds of its import capacity will be reserved for gas imported on a spot basis from elsewhere, potentially opening the door to cheaper energy.

Along with possible shale gas reserves (Poland has estimated 148 trillion cubic feet of recoverable shale gas) the LNG terminal may turn Poland from a country relying in 65 per cent on Russian gas, to a major trading and transit hub in Central Europe.

The country has already began exporting up to 1.5 bcm/y to Ukraine earlier this year and could send up to 10 bcm through the proposed north-south corridor to Croatia.

“The north-south corridor, currently under construction, could be an interesting alternative, particularly for the southern countries, as it will make it easier for them to access non-Russian gas,” Tomasz Chmal, an analyst at Poland’s Sobieski Institute, said.

“Countries like Slovakia, Hungary or Bulgaria could use it and buy gas at market prices, not the prices they manage to negotiate with Gazprom.”

The country’s geographical position in the middle of Europe – with a long Baltic coast and bordering seven countries – gives it a strategic advantage to connect it to European Union markets to the south and west as well as to Baltic and Nordic countries. Anna Bulakh, a research fellow at the International Centre for Defence Studies in Tallinn, said: “Poland more than any other EU member state has developed the political and commercial leverage to move the idea of the integrated European energy market forward in a way that can make it a hub for the Baltic-North Sea and Baltic-Adriatic corridors.”

While European countries are searching for alternatives to Russian imports, Russia is making progress in securing alternative clients for its gas. As soon as the ink dried on the $400 billion gas deal Russia signed with China, Russia suggested another deal 30-year deal to supply China with 30 billion cubic meters of natural gas from Western Siberia – a source which currently supplies European markets.

According to the portal Foreign Policy, the western gas route, also known as the Altai route, would lead from western Siberia through western China and then overland to the Chinese coast. The 30-year deal is expected to be signed as early as November this year.

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