Shale Gas behind Poland’s delay in signing energy accord?

Poland is delaying the signing of a new gas agreement with Russia.

The European Commission is stating that the Poles want to change its terms so as not to violate EU legislation. But it is in fact all much simpler: Poland has begun prospecting for shale gas and it does not now need an increase in supplies from Russia.

There is a threat to the signing of the gas agreement between Russia and Poland. "The Poles have stated clearly that they are delaying the signing of the agreement, since they will confer with us first and explain its contents to us," a report by the European Commission states. "We have also received evidence, and this was confirmed by Poland, that it is ready to revise the agreement in accordance with our interests." In turn, the head of the Department of Oil and Gas Ministry of Economy of Poland Maciej Kaliska stated that Poland "wants to be transparent and clarify all the doubts of the European Commission in relation to the gas agreement with Russia". "That is why we have decided that until this happens, there will not be a meeting between the Polish and Russian deputy prime ministers who have to sign the documents," the Polish publication Rzeczpospolita quotes Kaliska as saying.

The accord on increasing supplies of Russian gas to Poland and changing Gazprom's stake in the Polish company EuRoPol Gaz (the joint venture between the Polish state-owned PGNiG and Gazprom controls the Polish section of the Yamal-Europe gas pipeline) was reached at the end of last year. Under the agreement, Russia is expected to increase supplies to Poland from 8 billion cubic meters to 11 billion cubic meters. Poland consumes about 14 billion cubic meters a year, about one-third is provided by Polish gas producers, so if the volume supplied by Russia increases, Gazprom will to all intents and purposes become Poland's only foreign supplier (Poland previously bought the amount it lacked from independent traders).

The Russian monopoly-holder was supposed to get in addition, a 50% stake in EuRoPol Gaz (Gazprom's holding previously comprised 48%).

According to last year's estimates, 2% of EuRoPol Gaz cost about 24 million dollars, a meagre amount for Gazprom. However, by obtaining an equal share with Poland, Gazprom strengthens its position on the Polish market.

Finally, the agreement should be signed at a meeting between Deputy Prime Ministers Igor Sechin and Waldemar Pawlak. The meeting has been postponed several times already: it had been thought that it would take place next week, however now, according to the Polish newspaper report, the end of May is being discussed.

According to Dmitriy Abzalov, an expert at the Center for Political Conjuncture, the fact that the agreement in its current form violates provisions in the European Energy Charter was the reason for the European Commission's displeasure. According to the charter, one and the same company cannot simultaneously engage in supplying gas, distributing it and selling it in the market. And this is precisely the role that Gazprom will play if it gets half of EuRoPol Gaz.

However, this is more of a formal reason for the EU's quibbles. "The European Union is trying to assume the basic functions of a negotiator in the euro zone (especially in the energy sector)," Abzalov says. "That is why accords concluded directly, without the EU's involvement, do not suit the European Commission." And we are now, the expert thinks, seeing an attempt by Poland to improve its image in Europe. "Recently, Polish conservatives have been increasingly talking about reducing their dependence on the EU, and a gas agreement with Russia could become a sacrifice made by the Polish government to improve relations with Europe," the political scientist warns.

However, there are also reasons of a purely economic nature.

"Poland has become the European center for prospecting for shale gas," Mikhail Korchemkin, the head of East European Gas Analysis, explains. "Back in March, the Polish government issued 44 licenses to explore for shale deposits (there must be even more by now)."

In other words, Poland may not even need Russian gas, although it was the Polish side that insisted on increasing supplies. In Korchemkin's opinion, the delay in signing the agreement with Russia may be due to the fact that the Polish authorities are simply waiting for the results of the test drilling on the shale beds. And these results, the expert said, should be obtained this summer.

Article by Aleksey Topalov: "Poland Dragging Its Feet On Gas"  Gazeta.ru website, Moscow, in Russian 7 May 10 (BBC Monitoring via COMTEX) -

Source: Futures and Commodity Market News