September 2017

Polish-Russian energy relations following the aggression against Ukraine – part 2

Plans for both the construction of the LNG terminal and the physical reversal of the Yamal-Europe gas pipeline had been in the pipeline for a long time and were not drawn up in response to Russia’s current policy whereas the idea of the EU Energy Union proposed by the previous Polish government and plans to look for additional sources of supply announced by the current Polish government can be considered responses to the increased uncertainty prompted by Russia’s aggression against Ukraine. In other words, these measures were designed to diminish the susceptibility of the Polish energy sector and the Polish economy to possible turmoil in relations with Poland’s eastern partner. This applies to measures aimed at equipping the EU with effective response capabilities. Poland is also working on its own solutions to enhance the physical security of its gas supply and bolster its bargaining power in negotiations with importers.

In 2014, the Polish government prepared a ‘non-paper’ containing proposals for the creation of an EU Energy Union which will lead to the construction of a more coherent EU energy policy especially in the area of security of supply. The strategy was accepted by the European Commission which supplemented Polish proposals with plans related to the development of both the energy market and climate policy. One cannot rule out the possibility that Russia’s aggression against Ukraine and subsequent concerns about the stability of supply became a catalyst for these decisions made by Poland and the European Commission. Undoubtedly, the latest developments resulted in an increased political determination within the EU to identify ways to diminish energy dependence on Russia. However, voices of milieus in favour of ‘business as usual with Russia no matter what’ have grown louder with time as exemplified by agreements on the construction of new Nord Stream lines. The debate over the role of Nord Stream 2 against the backdrop of sanctions imposed in response to Russia’s aggression against a neighbouring state, raging on both in the EU and overseas, has gone far beyond the field of energy and clearly serves as an indicator of the preferences of different political and economic interest groups in Europe.

From Poland’s perspective, the Nord Stream 2 project is clearly in contradiction with the policy of condemnation of the violation of international law declared by EU member states and the EU as a whole which is symbolised by sanctions. It is also in stark contradiction with the adopted objectives of the EU Energy Union. It comes as no surprise that, given the diminishing confidence in EU support mechanisms, Poland’s attention has shifted towards accelerating the pace of implementation of its own projects. A key project is the Baltic Pipe project which would enable the delivery of natural gas from Norwegian deposits to Poland. It will prospectively serve as an integral element of the North-South gas corridor in the EU and offer a new source of supply to Central and South-eastern Europe which is currently dependent on Russia to a large extent.

In the light of this concept, Poland could become a key player in regional markets and potentially even a regional distribution hub in the future. This plan is in contradiction with the Nord Stream 2 project supported by a number of Western corporations and indirectly by the governments of Germany and Austria. Nord Stream 2 would effectively enhance the role of Germany as a key player in the EU gas market. At the same time, it would certainly hinder the implementation of Polish plans since new Nord Stream lines would significantly increase Gazprom’s ability to penetrate the market which would make authentic competition even more illusory.

The Polish government is one of the greatest opponents of the Russian-German project and employs political and legal tools to stop its implementation. Measures adopted by the Polish Office for Competition and Consumer Protection in 2016 forced Western companies to leave the consortium, which resulted in an increase in the cost of developing new financing schemes. Similarly, the Polish government appealed to the European Court of Justice over a European Commission decision of October 2016 which granted Gazprom greater capacity on the OPAL gas pipeline which carries gas from Nord Stream. Initially, the ECJ suspended the decision only to lift the suspension a few months later, but the matter is still pending. It is difficult to say what the outcome of Polish efforts (supported by the Baltic States and some of the Central European partners) will be, however, it is clear that the prevailing stance in Poland is that support for projects detrimental to the interests of EU member states and Ukraine based on a faulty argument which has it that Nord Stream 2 is purely a ‘commercial project’ shows irresponsibility and political short-sightedness given the exceptional international situation in the aftermath of Russia’s aggression against Ukraine.

 Author: Ernest Wyciszkiewicz

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