Posted on 04/27/2022 8:37:02 PM PDT by Cronos
Poland has been preparing to give up Russian gas fuel for a long time, so Gazprom's decision to turn off the tap did not surprise her. Rather, the inevitable has accelerated. Poland's energy security should not be jeopardized, but the gas turmoil may again have an impact on Poles' bills in a few months. The former president of PGNiG draws attention to one important element of the entire gas puzzle.
On Wednesday at 8.00, Gazprom will officially suspend gas supplies to Poland under the Yamal contract . The day before, journalists reported that gas fuel transmission from the east fell to zero. The Ministry of Climate and Environment called an unannounced press conference on Tuesday evening, during which the head of the ministry, Anna Moskwa and Piotr Naimski, assured that Poland was ready to cut off gas supplies via Russia.
We are ready for full independence from Russian raw materials, Minister Anna Moskwa emphasized during the conference.
The Russian company informed PGNiG that the suspension of supplies would take place in accordance with the provisions of the Decree of the President of the Russian Federation of March 31, 2022, due to the Polish side rejecting the possibility of making payments in rubles.
According to media reports, Gazprom is also to cut off Bulgaria from its gas from Wednesday. The company's decision may be perversely defined as the imposition of sanctions by the Russian Federation on itself
According to the calculations of the Polish Economic Institute , Russia's revenues from customs and taxes related to natural gas extraction in the first two months of 2022 were the highest in at least four years and amounted to over EUR 5.4 billion. Just as Europe is dependent on gas from Russia, so is Russia dependent on billions of euros from the European Union
Gazprom has accelerated the inevitable
Gazprom's decision only accelerated what was to happen anyway at the end of this year. Poland did not intend to extend the contract with Gazprom for the supply of Russian fuel. Therefore, Polish gas storage facilities are already full in April at an unprecedented level for this month - 76 percent. In other European countries, gas tanks are filled to about 30 percent. Therefore, such a move in relation to other EU countries would be much more dangerous from the point of view of energy security.
Energy expert and journalist Jakub Wiech believes that Poland is able to cope without gas supplies under the Yamal contract. Especially since there have been cases where Gazprom "turned off the gas tap" before, and not in such a distant past.
We are ready to suspend gas supplies from Russia. We have our own gas extraction capabilities, we have the possibility of receiving LNG through the terminal in Świnoujście, we have interconnectors and almost full warehouses. Gazprom has already suspended gas supplies to Poland in the past. Such situations took place, for example, during the NATO summit in Poland and the visit of Donald Trump, but they were short-lived. However, now, judging by the letter sent by Gazprom, you have to take into account a longer break - says money.pl Jakub Wiech.
The stored gas fuel gives Poland the time needed to complete investments such as the construction of the Baltic Pipe gas pipeline , which will be delivered to the Vistula with gas from Norway. From May, the possibility of deliveries through the gas pipeline connecting Poland and Lithuania, to which gas is delivered via a floating LNG terminal, will start.
Additionally, Poland can buy gas in reverse from Germany and obtain it on European markets. Of course, it is not certain that gas supplies from Russia in the coming months will not be realized again until the end of the contract, which expires at the end of the year. Piotr Naimski, the government plenipotentiary for strategic energy infrastructure, emphasized during the conference that all Polish gas needs can be met from other
" Perhaps this is the end of gas supplies to Poland from Gazprom. If the attitude of the Russians does not change, i.e. if their demands for payment in rubles do not cease, and if there are no extraordinary circumstances on the Polish side, April 26, 2022 may go down in history as the end of the Yamal contracts, concludes Jakub Wiech. "
Former president of PGNiG, Grażyna Piotrowska-Oliwa, is of the opinion that we will have enough gas supplies until at least summer, of course if Poland only uses this source. Although, as Anna Moscow announced during the conference, there are no such plans at the moment.
- It all depends on how long it will take. Official data show that the warehouses, with a capacity of 2.85 billion cubic meters, are approximately 80 percent full. - points out the interlocutor of money.pl.
If it is not possible to obtain gas from other sources, these reserves should last for about two months. Out of four if we diversified our consumption with other sources, such as a gas terminal. Half of the gas supplied to the Polish market is Russian gas purchased under the Yamal contract, says Grażyna Piotrowska-Oliwa
However, there is a danger. It is still uncertain how many other countries Russia will cut off gas in the near future. It is not only Poland that has decided not to pay for gas in rubles. More recently , the European Commission stressed that such payments will be a collapse of sanctions .
If the Kremlin cut off half of Europe from its gas, the demand for the raw material purchased on the stock exchange would increase. In a situation of strong demand, prices may soar. We saw a similar situation last year, when gas prices - due to Moscow's policy - increased significantly.
It is a fact that gas fuel prices react quickly to this changing situation. It was already visible on Tuesday, when information on the potential cut-off of Poland from supplies affected the prices on the Dutch stock exchange.
The problem is completely different. We will use gas purchased on an ongoing basis. In a situation where gas is turned off not only in Poland, the prices of gas available on exchanges will immediately increase. Unlike oil, you cannot increase your daily output quickly. It does not work like that. The warehouses are there to be filled in summer, when gas is cheaper, and to be able to use them in winter, in the season of the highest demand, sums up Grażyna Piotrowska-Oliwa.
In the case of individual customers in Poland, high gas purchase prices are buffered by tariffs regulated by the President of the ERO. However, gas prices for entrepreneurs and industry were freed up a few years ago. Therefore, in their case, high gas prices on commodity exchanges are basically one-to-one.
In the fall and winter, gas prices for entrepreneurs rose by several hundred percent in some cases. The situation may repeat itself this year. The more so as we are ready to be cut off from Russian gas, but just like our warehouses - not 100 percent.
Piotr Naimski said during the conference that "perturbations" on the gas market may last about two years.
- This market will stabilize when European customers will be able to deliver to Europe from outside Russia the amounts of gas that are currently sent by Russia. It is a matter of using fully gas terminals in Western Europe, adding certain elements of gas pipelines so that all of this could reach the recipients and it will take some time, probably around two years - said Naimski
I don’t think this is no problem for Poland but, the Poles are much much better prepared for it than Germany. They built an LNG terminal already. They already signed a long term supply contract with the US a year or two ago. They built extra storage capacity and have more on hand and now I see they’re preparing to be able to get gas from Norway.
They could probably use a nuclear power plant or two and maybe expanding their coal mining would be feasible as well. If others had had the foresight the Poles had, (looking at you Germany) they’d be in much better shape right now.
Not to put a fine line on it, but the Poles, the Baltic states, Romania etc. KNEW what it was like to be under Moscow’s thumb. So they kept screaming to the west, but were ignored.
Putin is destroying Russia every bit as much as he is destroying Ukraine
What is amazing is Russian timing.
If they had done this in November 2021 there would have been difficulties.
If they did this in November 2020 then the West would have capitulated immediately.
Poland has not closed coal power stations. Majority of its electric power generation comes from coal stations.
Poland says its ban on all Russian oil and gas imports is the most radical in Europe
Who banned whom...?
Poland uses coal power plants for generating electricity and heating in cities.
A natural gas pipeline from Norway to Poland will be completed in October this year.
As you can see, there was a plan put in motion few years ago to switch gas supplier in Poland.
There will be no sitting in darkness or cold next winter.
Russia knows this and this is just a propaganda move to impress uninformed people.
I would be far more impressed had Russia announced stop to selling gas to Germany. Germany is not ready for switching gas supplier. They are more susceptible for a blackmail about gas delivery. However, Russia has chosen not to disrupt sales to Germany, their biggest customer. They like the money coming from huge sales to Germany.
Poland signs 20-year deal to buy natural gas from the US
Poland has signed a long-term deal with a U.S. company for supplies of liquefied natural gas as part of an effort to reduce its dependence on Russian energy
By VANESSA GERA Associated Press
December 19, 2018, 10:28 AM
“In the years to come the US and Israel will step and fill some of this demand. Great news for Texas.”
See link below to see how Joe Biden killed the proposed natural gas pipeline from Israel to Europe. Israel has a lot of natural gas in its Eastern Mediterranean waters. This helped Russia. It makes you wonder about Biden’s motives and which side he is on.
https://www.gatestoneinstitute.org/18232/israel-europe-gas-pipeline
“ in the long term, they have hurt themselves by not being a supplier that anyone can trust”
That long term may only be about two years. There is a big bow wave of increase in the price of gas, as major customers are suddenly trying to buy major new supplies. So as Russian exports drop in half, it doesn’t hurt Russia as much, as long as prices have doubled. In reality though, most of Russia’s exports are on long term fixed price contracts, so the increase in spot prices likely only buffers a portion of their decreased volume.
But the replacement program that Europe is on now, envisions about two years to expand import capacity to replace Russian gas. Distribution will be a challenge that may lag in some places, and prices will be high. But in about two years, they now expect to be able to shut off the gas from Russia. They can substitute some coal and oil for Russian gas in electrical generation (and crank up some output from nuke plants), as well as possibly tightening the belt a bit through conservation efforts, to mitigate the transition off of Russian gas.
But as volumes shift, it will reach a point where the addition of new replacement production drives total Global production significantly above total demand (likely well before two years). Then either Russia production is decreased correspondingly, or spot prices start to dive from the surplus. Or both. That is when the serious screwing of Russian Government finances hits home.
We are on some varying downward slope for Russian gas revenues from Europe, which is about 75% of Russia’s current gas exports. This Coming Winter is possibly the last hurrah for Russia’s ability to inflict serious pain on Europe by throttling gas. After that, they will likely have to offer discounts for market share, and be in a position where the Europeans maintain the capacity to turn off the Russians at any time.
An awesome, historic strategic fail by Putin, killing the goose that laid the golden eggs.
Just wait until Brandon hears about THIS!
Glad to hear that about Poland.. too bad the western Euros didn’t heed Reagan’s warning in the 1980s about reliance on alRussian energy.
I will rectify that in short order and perhaps just button up my keyboard. It is not the first time.
No worries, we all sometimes do that
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