Poland Likely to Never Achieve ‘Energy Independence’ Despite Plans to Buy US LNG

Although Poland aims to end its reliance on Russia’s natural gas by switching to the imports of US liquefied natural gas (LNG) and Norwegian pipeline gas, these options bear their own risks and disadvantages, and Warsaw’s aspiration to become energy independent is almost impossible to realize in the foreseeable future, analysts told Sputnik

MOSCOW (UrduPoint News / Sputnik – 30th June, 2020) Although Poland aims to end its reliance on Russia‘s natural gas by switching to the imports of US liquefied natural gas (LNG) and Norwegian pipeline gas, these options bear their own risks and disadvantages, and Warsaw‘s aspiration to become energy independent is almost impossible to realize in the foreseeable future, analysts told Sputnik.

Poland has long been seeking to limit or completely abandon the deliveries of Russian natural gas due to political differences with Moscow and a complicated historic past between the two countries. However, the share of Russian gas in Poland still amounted to 60 percent in 2019.

Earlier in the week, Polish President Andrzej Duda paid a visit to Washington and met with his US counterpart, Donald Trump. It was announced that Poland and the United States had signed $50 billion worth of contracts with the United States to buy 140 million tonnes of LNG. At the same time, a senior US official has said that Poland would become “energy independent” starting in 2022, when a contract on the supplies of Russian natural gas expires.

SWITCHING FROM ONE GAS SUPPLIER TO ANOTHER DOES NOT EQUAL INDEPENDENCE

Moving from one major gas supplier to another, in this case from Russia to the United States, does not equal “energy independence,” which in fact could be achieved only by having multiple sources of energy imports, Mamdouh G Salameh, an international energy economist, told Sputnik.

“The claim by a senior US official that Poland would be ‘energy independent’ by 2022 when its contract with Gazprom ends is not only laughable but also wishful thinking and self-delusional. How could switching natural gas deliveries from one supplier to another amount to ‘energy independence?’ Energy independence is achieved only when a country can satisfy its energy needs from domestic sources,” Salameh, who serves as a visiting professor of energy economics at the London-based ESCP Europe business School, said.

Werner Antweiler, a professor with the Sauder school of Business at the University of British Columbia (UBC), also thinks that a country that relies on the imports of energy cannot achieve real energy independence.

“Any country that relies on significant energy imports is unable to achieve true energy independence. Instead, energy importers try to diversify import sources (and thus diversify risk) while at the same time considering cost differences across different suppliers. LNG has traditionally been a very expensive source of natural gas because of the cost of liquefaction and transportation,” Antweiler told Sputnik.

Jonathan Stern, a professor with the Oxford Institute for Energy Studies, notes that Poland‘s aspiration to give up Russian gas is driven by political reasons rather than economic rationale.

From an energy perspective no, but the Polish government is not looking at this from an energy perspective, they are looking at it from a political perspective and nothing matters from a political perspective other than being able to say they are independent of Russian gas,” Stern told Sputnik when asked whether Poland will achieve energy independence by switching to US and Norwegian gas.

BALTIC PIPE NOT IMMUNE FROM DELAYS

Apart from the LNG imports, Poland has opted to decrease its dependence on Russian gas by the construction of the Baltic Pipe project. The pipeline will bring gas directly from Norway via Denmark. According to the agreement, the project is to be implemented by 2022 and will cost approximately 1.7 billion Euros (over $1.9 billion). On May 4, the Polish president said that the construction would commence in the coming days.

However, the experts say that there is a risk of the pipeline not being ready to transport gas by 2022, when Poland‘s contract with Gazprom expires.

“The Baltic Pipe is now close to being fully financed, and all the required permits are in place. It remains on track despite the current pandemic. However, construction delays are not unusual, and I consider the timetable as challenging. The target date of October 2022 appears to be rather optimistic,” Antweiler said.

Salameh is also skeptical about whether the pipeline will be ready on time, and the launch of the Russian-German Nord Stream 2 pipeline may leave Baltic Pipe financially unviable.

“The big question is whether the Baltic pipe is financially viable at a time when the Russian rival Nord Stream 2 will be completed this year and whether it will be ready by the time Poland‘s Gazprom contract expires by 2022. Without developing sizeable amounts of gas to cover all its needs from licensed gas fields in Norway‘s waters which in itself is very dubious, Poland‘s aspirations of becoming energy independent or an energy hub will never materialize in the foreseeable future or ever,” the prominent energy economist said.

But not only are the potential delays in construction of the Baltic Pipe standing in the way of Warsaw‘s plans to give up Russian gas. Poland is Europe‘s biggest hard coal producer and has always been largely dependent on coal in its energy mix. However, the share of coal in the total Primary energy supply has fallen considerably since the early 1990s, when it stood at over 70 percent, to 47 percent in 2018, according to the International Energy Agency.

In light of the Paris Climate Agreement and EU’s Green Deal, Poland has to gradually phase out coal, even though Warsaw has opted out of the bloc’s net-zero emissions target by 2050 and vowed to reach the EU climate-neutral targets “at its own pace.” In order to replace coal, Poland may need to increase imports of natural gas and thus may continue to import Russian gas.

“If Poland wants to stay on track of EU targets to decarbonize its electricity generation, it will need to rely on expanded imports of natural gas to meet these targets … This could potentially increase Poland‘s demand for natural gas´┐Żand continue to provide a lucrative trading opportunity for Gazprom despite diversified imports from Norway, Qatar and the United States,” Antweiler said.

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