Poland tries to wean itself off Russian energy
WARSAW — As the EU discusses how fast it can reduce its dependency on Russian energy imports, Poland claims it’s an example of how to do just that as it ends its status as a Russian natural gas customer.
“Over the past five years, we have built the Baltic gas pipeline to Norway and in six months, for the first time in decades, we will be independent of Russian gas,” Poland’s Prime Minister Mateusz Morawiecki said Wednesday.
But it’s going to be much tougher for Poland to cut its need for Russian coal and especially oil.
Poland’s long-term gas supply contract with Russia’s Gazprom expires at the end of the year and Warsaw has no plans to renew it. Russia currently supplies about 55 percent of Poland’s annual demand of about 21 billion cubic meters of gas.
Poland laid the groundwork for ending Russian gas purchases by first building a liquefied natural gas terminal in the Baltic port of Świnoujście. The terminal, supplied by Qatari and U.S. companies, is capable of handling 5 billion bcm of gas and is being expanded to 7.5 bcm in 2023.
The project that is about to complete Poland’s gas U-turn from Moscow is the Baltic Pipe connecting Poland to Norway’s offshore gas fields, with a final capacity of 10 bcm.
Any extra gas demand will come from domestic production and imports through interconnectors with Poland’s EU neighbors. At the end of February, Poland and Lithuania agreed to bring forward the launch date of the GIPL gas link to May 1.
Polish politicians are urging other EU countries to immediately cut off energy imports from Russia to stop funneling cash to Moscow. A daily counter set up by the NGO Europe Beyond Coal calculates that the bloc has sent more than €9 billion to Russia since it invaded Ukraine on February 24.
“Strong and decisive sanctions that would hit Russia” make sense as they’d affect a key source of the Kremlin’s income, Poland’s Climate and Environment Minister Anna Moskwa said earlier this week. “We are working with absolute responsibility on the introduction of sanctions by Europe for gas, fuel and coal.”
EU leaders meeting in Versailles said Friday they would “phase out our dependency on Russian gas, oil and coal imports as soon as possible.”
The cost of going cold turkey
An immediate end to Russian energy would be very painful for many countries — and that includes Poland. While it has made progress on natural gas, Poland still relies heavily on Russian coal and oil. It had the fourth-highest energy import bill from Russia of any EU country, last year sending €15.4 billion to Moscow.
Russian oil covers two-thirds of Polish demand, said Bernard Swoczyna, with Warsaw’s Instrat think tank.
“We are more dependent on Russia’s oil than we are on their gas. In addition, our largest refinery in Płock is technically and logistically customized to crude oil supplies from Russia,” he said.
Warsaw has only recently begun making moves to change the status quo. It sold a stake in the state-controlled refiner Lotos to Saudi Aramco in a side deal clearing the way for Lotos’ merger with another state energy giant, PKN Orlen.
“Supplies from Saudi Aramco to Orlen refineries in Poland — and also to the Czech Republic and Lithuania — could increase even fourfold in a maximum scenario from around 5 million tons annually to 20 million tons,” said Robert Tomaszewski, an energy market analyst from Polityka Insight, another think-tank.
“This will reduce Poland’s dependence on Russian oil. Entering the Polish market will also open an opportunity for Saudi Aramco to expand further in the region, so in the markets dominated by Russia’s Rosneft,” Tomaszewski added.
Orlen’s oil supply deal with Rosneft runs until 2023.
As well as shifting to non-Russian suppliers, Poland also has to do a better job of using less oil, said Swoczyna.
“We have neglected rail transport for years, allowing 90 percent of cargo to be transported by trucks. And that is biting us now. We need to carry more goods by rail, recreate public transport outside cities and make it easier for people to cycle or walk,” he said.
Although Poland has the EU’s largest coal mining industry, the hard coal it produces is expensive and private companies buy significant amounts of low-sulfur Russian coal. Last year Poland imported 8.3 million tons, compared to domestic production of about 54 million tons.
The war is leading to calls to boost coal mining in Poland, which would reverse a decades-long trend of cutting production.
“We have to start a real reactivation of coal extraction in Poland,” former Polish Economy Minister Jerzy Markowski told news website wnp.pl this week, adding: “The drama of the war in Ukraine and the effects of the sanctions have dramatically exposed the abstraction and stupidity of the European Union’s energy policy.”
That’s not what Brussels wants to hear. Green Deal chief Frans Timmermans said last week that it might make sense of coal-dependent countries like Poland to keep burning coal for longer rather than switching to natural gas before converting to renewable energy. However, he cautioned that if any countries took advantage of that to open new coal mines, it would be “an incredibly stupid choice.”
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