Poland Seeks Alternative Energy and Snubs Russia

Poland’s state-owned gas company signed a 20-year deal to buy liquefied natural gas (LNG) from Qatar, a deal which will send a clear message to Moscow and the rest of Europe that it is not dependent on Russian energy alone.

 

The deal is landmark for both Poland and Europe due to the inaction of EU states to attain alternative natural gas flows outside of Russia, especially since Russia’s repeated regional shut-offs, including the most recent one over New Year’s due to contract disputes with Ukraine. This year the Nabucco project, a potential pipeline from Turkey (via the Balkans) to Europe made headlines but lacked funding; the only concrete resolutions to come from the European community include green energy projects and increased funding for wind turbines and hydro-electric  technology. 

 

Poland’s deal highlights the advantages of LNG technology. LNG gas takes up about 1/6oo the volume of natural gas, making it efficient to transport by ship to circumvent Russian pipeline delivery. Till this point Europe has been adverse to LNG technology due to the massive infrastructure start-up costs and time associated with building LNG terminals (where LNG is stored and regasified) versus the cost benefit of piped Russian gas. 

 

The political significance of the deal, which pigtails our post (“Feeding The Ox 2”) on China’s announced $10 Billion minority stake in Kazakhstan’s state-owned oil company, is immense. Again, Russia stands to lose on the deal, both strategically and competitively. Yet Poland relies on Russia for some two-thirds of its gas (EU average 42%) and the projected deal would only supply the country with one-tenth of its annual consumption, and Poland won’t be buying gas from Qatar until 2014.

 

For Poland, arguable the one Eastern European country to make the largest capitalistic strides while cementing its western (EU) orientation since the Fall of the Berlin Wall, has a long history of antagonism and distrust for Russia—this is nothing new. This Qatari deal, along with Poland’s announcement to build an LNG terminal more than three years ago and pipeline project to Norway, does not mean that Poland is energy independent from Russia. It is however a bold political move, one Putin & Co. will interpret as a slap in the face, and may be the catalyst for European nations to limit their dependence on Russia energy and make alternative gas solutions a reality.

 

Matthew Hedrick
Analyst

 

Poland Seeks Alternative Energy and Snubs Russia - LNGPHO