Poland’s gas pipeline ambition is just a pipe dream, industry expert tells RT

The planned gas pipeline linking Poland to Norway via Denmark is a “senseless waste of money” that could harm the European energy market, the deputy director general for gas issues at the National Energy Security Fund has told RT.

The construction of the Baltic Pipe, a joint project of Poland’s state-owned Gaz-System and Danish company Energinet, is aimed at cutting Warsaw’s reliance on Russian natural gas. It is expected to be finished in 2022 when Poland’s long-term deal with Russian gas major Gazprom expires. The 900km pipeline has the capacity to deliver 10 billion cubic meters of natural gas annually, and is set to stretch through the Baltic Sea, where the Russian Nord Stream already lies.

However, the project may not be worth the money that Europe has invested in it, Alexei Grivach of the National Energy Security Fund told RT. He explained that Norway already has a system of gas delivery to Europe, including Germany, the UK, France and Belgium. The country’s gas output is also already “at maximum capacity” and is decreasing.

“This means that when the construction of the Baltic Pipe is finished, it will be necessary to lower the volumes of Norwegian gas sent to the markets of North-Western Europe… So the beginning of Norwegian gas supplies to Poland means a disruption in the gas balance” of the region, Grivach said.

Increasing the energy supply from Norway to Poland could also raise costs for other European countries, the energy expert believes.

“It is just a senseless waste of money in terms of the united [European gas] market, as the European customers will bear all the expenses for this gas pipeline,” the analyst warned. He added that Europeans will have to pay for infrastructure that was not actually necessary.

As the Baltic Pipe route overlaps with Russia’s existing Nord Stream pipeline, Poland will have to come to an agreement with Russia's Gazprom, the Financial Times reported, citing an energy analyst from Polityka Insight. The overlap of the two gas pipelines is a matter of security for both projects, Grivach told RT. He noted that the Polish operator will have to coordinate with its Russian counterparts regarding the technical details of the crossover, but such issues can be “routinely” solved.

Warsaw is the biggest buyer of Russian gas in Eastern and Central Europe. In 2017, Gazprom delivered 10 billion cubic meters of gas to Poland, which covered 54 percent of the country’s demand, according to the company.

The contract between Gazprom and Poland’s state-run natural gas company PGNiG expires in 2022. The Polish side has been demanding that the Russian company lower prices for gas, and filed a complaint on the matter with the Arbitration Institute of the Stockholm Chamber of Commerce – a neutral body that resolves international commercial disputes. The arbitration court ruled in favor of the Polish company, but said that its request regarding a new price formula was “too far-reaching.” In October last year, Gazprom appealed the arbitrators’ decision.

In an apparent bid by Poland to reduce its reliance on Russian gas, its state gas company signed a 20-year deal to buy liquefied natural gas (LNG) from the United States. American company Venture Global is expected to provide two million tons of LNG annually, or 2.7 billion cubic meters of natural gas after re-gasification, starting from 2022. American LNG is more expensive, however, and the US cannot provide enough for Poland’s needs.

Warsaw is also a vocal opponent of the Nord Stream 2 gas pipeline between Russia and Germany. Last year, Polish Prime Minister Mateusz Morawiecki asked the White House to sanction the Russia-led project, which is currently under construction. He recently said that Nord Stream 2 contradicts European values, but admitted that it would be difficult to stop “two strong states” from implementing it.

For more stories on economy & finance visit RT's business section