Poland aims to become the first country in Europe to give up all Russian energy resources. That is why it is running ahead of the European Union and deciding on the toughest sanctions right now. The authorities in Warsaw are not only refusing coal and oil from Russia, but are also on the cusp of stopping Russian gas supplies right now. Why have the Poles chosen this path for themselves?
Poland has drawn up its own sanctions list against Russia and Belarus, Polish Interior Minister Kaminski told a briefing. Warsaw felt that EU sanctions are not enough for it, it wants to tighten them.
The Polish sanctions list includes 15 individuals and 35 companies. And the list appears to include not only a tougher embargo on coal and oil, but also sanctions in the gas sector – against Gazprom and Novatek.
The EU has so far only imposed an embargo on Russian coal. There is no talk yet of an oil embargo, and there may not be a total embargo because there are fierce discussions within the EU about the dangers of such a move. The EU is not even thinking of a gas embargo because they recognize that they cannot do without Russian gas in the coming years.
But Poland wants to be the first EU country to completely cut off supplies of Russian hydrocarbons. Warsaw has already announced that, separately from the EU, it will impose a complete embargo on coal from Russia and Donbass without any of the temporary delays that other countries have gone for.
Last week, Piotr Naimski, the Polish government’s strategic energy infrastructure representative, said Warsaw wanted to terminate all previous oil supply contracts with Russia. Poland is now directly hitting Gazprom and Novatek, and has also officially declared its refusal to pay roubles for Russian gas supplies.
“All the latest decisions of Polish politicians have clear political overtones. This is such a manifesto, which, according to the Polish intention, should set an example to other European countries how to act harshly against Russian energy companies”, – says Alexei Gromov, director of the energy sector at the Institute of Energy and Finance.
Poland has long played the role of a U.S. subject in the European Union. Therefore this gesture is of course also aimed at demonstrating full solidarity with Washington, which has imposed an embargo on all Russian hydrocarbons. Admittedly, it was not that difficult for the US: they received neither coal nor gas from Russia. They imported mostly fuel oil from Russia for refining for their refineries.
Another motive for Poland to be zealous in terms of sanctions against Russia. Warsaw decided to use the opportunity to “deal” with Russian business on its territory under the banner of sanctions. At some point the next step could be nationalisation of Gazprom and Novatek assets on Polish territory.
For example, Gazprom and Polish state corporation PGNiG are co-owners of Europol Gaz, which owns the Polish section of the Yamal-Europe pipeline (a pipe from Russia to Germany). The Russian side owns 48% of the shares and the Polish side 52%, i.e. control. Warsaw intends to freeze Gazprom’s rights to its stake and its rights to dividends as part of sanctions. A reasonable question then arises: will Poland ever unfreeze these assets or will a new excuse be found to nationalise Gazprom’s property?
The Polish section of this pipeline was built in the 1990s with Gazprom’s money (a loan from Gazprombank), so it is logical that Gazprom initially had a controlling stake in Europol Gaz. It lost this control not of its own free will but because Brussels came up with new rules for the energy market and based on them deprived Gazprom of the decisive vote in the company that owns the pipeline.
When the Polish PGNiG gained control, it sidelined Gazprom from taking part in managing the pipeline. Gazprom booked capacity on the Polish section of the pipeline under common rules. In addition, Poland refused to pay a dividend to Gazprom as a shareholder. At issue is half of the $430 million accumulated profit of the Europol Gaz joint venture. Gazprom had to sue the Polish company to correct these two injustices. The legal proceedings are still ongoing.
But Warsaw has decided not to wait for the dispute to be settled in court, but simply to impose sanctions, under which Gazprom, which built the pipeline with its own money, has no rights to the pipe at all. It is a story of how, step by step, a European country creates a supposedly legitimate, democratic takeover of a foreign investor.
There is a similar story with Novatek, which has a subsidiary in Poland, Novatek Green Energy. Poland’s sanctions against this company also provide for freezing of assets plus exclusion from public procurement procedures. Whether Novatek will get its assets back is an open question. And Novatek Green Energy is a company, as its name suggests, in the spirit of European environmental principles. It was Novatek Green Energy that opened Europe’s first carbon-neutral LNG filling station in December 2020. The company offset all greenhouse gas emissions generated by transporting LNG from European terminals to the refuelling station, by the operation of the refuelling station itself and by the final consumption of LNG.
In other words, under the guise of general dislike for Russia, Warsaw imposes sanctions against Russian “green” energy. Poland has never had any love for EU “green” agenda, but as an EU member it has to pretend and approve “green” projects that Poland needs itself.
Meanwhile, Poland is most happy about the EU’s crackdown on Russian coal, because it would free Poles to revive their own coal production. Therefore, giving up Russian coal was first on the list of Polish sanctions – it was announced back at the end of March.
After the Polish Interior Ministry said that Gazprom’s assets in the Yamal-Europe pipeline joint venture were frozen and that it would not pay for gas in rubles, the Polish newspaper Onet, citing sources, reported that supplies of Russian gas to Poland were suspended and a crisis group was assembled in the local climate ministry. However, late in the evening, Gazprom did not confirm that supplies to the country had already been suspended, Interfax reported. But they added that it was on 26 April that Warsaw was “obliged to pay for gas supplies in accordance with the new payment procedure”. This means one thing: stopping gas supplies from Russia to Poland may only be a matter of time.
Warsaw may indeed succeed in being the first to give up all Russian hydrocarbons.
“The Polish market has never been very important for Russian supplies of both coal and oil and gas. Therefore, I see the Polish demarche solely as a political manifestation of extremism. It will not have a significant impact on Russia’s export potential to other EU countries. Poles themselves, with certain economic losses, will be able to survive without Russian energy resources”, – Gromov said. Polish authorities say bluntly that the replacement of Russian hydrocarbons will be more expensive, but Poles must pay the price.
According to the expert, Poland is counting on the fact that the heating season is over and the purchase of Russian gas in the spring and summer months is needed, as a rule, to pump gas into underground storage facilities (for the winter period). Therefore, the Poles can go through the summer relatively unscathed with the existing reserves. Plus they still have the possibility to get gas from Germany by physical reverse through Yamal-Europe. It is clear that gas from Germany is still the same Russian fuel, only from Nord Stream 1.
“And by September, the Poles hope to have the 10 billion cubic metre Baltic Pipe pipeline in place to supply Norwegian gas. Plus the Poles are counting on American LNG”, – says Gromov.
In practice, however, there may be many problems. Firstly, the situation will become critical if the pipeline is not commissioned in September; the original deadline was the end of 2022. Secondly, Poland has had problems with the fact that it has not managed to contract the gas for the entire volume of Baltic Pipe. Hence the question: will Norway be able to pump 10 billion cubic meters of gas through the pipe or not? Will Norway be able to increase its production so much for the sake of Poland? Because otherwise Norway would have to take away gas destined for Germany and send it to Poland, which is hardly feasible.
As for the loss of the Yamal-Europe pipeline, it has not been of much interest to Gazprom for a long time. This pipeline was used, first of all, to fulfil a contract with Poland to deliver 10 billion cubic metres of gas per year (with a capacity of three times that amount). But that contract ends in December 2022, and the Poles have no intention to extend it. Secondly, the pipe was used to pump additional volumes of gas to Europe beyond the contractual obligations. That is, when demand in Europe increased sharply and the capacities of Nord Stream, Turkish Stream and the Ukrainian GTS were insufficient. But that has been rare.
“This is why we have seen over the past few months that Gazprom has not reserved capacity for Yamal-Europe, and the pipeline has often worked in reverse mode, supplying gas from Germany to Poland. Gazprom has not been interested in this route for a long time”, – says Alexei Gromov.
Olga Samofalova, VZGLYAD
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