Warsaw Weakens Gazprom’s Grip

Poland currently buys nearly all of its gas from Russia, but the construction of a new LNG import terminal and a proposed pipeline link with Norway could help weaken Gazprom’s grip on Warsaw. Reuters reports:

Poland has finished construction of a 3 billion zlotys ($794 million) LNG terminal by the Baltic Sea, which is expected to receive its first commercial shipments in July. Late last year, state-controlled utility PGNiG also revived plans to build a pipeline by 2022 to carry gas from Norway.

“Thanks to the terminal and the Norway link this big dream of Poland becoming a gas hub could materialise,” PGNiG deputy head Janusz Kowalski told a gas conference.

While a Polish gas trading hub is at least a few years off, analysts say shared borders with seven nations and a long Baltic coast provide an ideal location for connections to EU markets to the south and west, as well as Baltic and Nordic countries. Success will depend on attracting high volumes of gas, which Poland hopes the Norwegian link and LNG terminal will provide.

Europe is quickly turning itself into an attractive destination for LNG cargoes. Lithuania already has a floating LNG terminal up and running—tellingly named the Independence—while Croatia is looking to construct its own terminal on its Adriatic coast.

This turn to liquified natural gas comes largely in response to Russian aggressions in Ukraine and Gazprom’s decision to cut off supplies to the eastern European country (and therefore much of the rest of Europe) multiple times over the past decade. LNG can therefore help Europeans bolster their energy security, and to that end new American supplies can play an important stabilizing role there—and in fact Europeans are already buying up U.S. shale gas.

Between new imports from LNG and Norway, Poland can start to pry away Putin’s stranglehold on the country’s energy supplies. Day by day, Europe appears to be getting less and less like the docile market Gazprom wishes it to be.

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