Gas dream almost realized
Conceptual work for the construction of the Baltic Pipe gas pipeline started in early 2016. The division of roles in government was clear. Piotr Naimski was responsible for the construction of the infrastructure, for whom it was the third attempt to build a gas pipeline connecting Poland and Norway. Piotr Woźniak, president of PGNiG, was responsible for the gas supply and raw material base, whose geological knowledge and knowledge of the Norwegian fuel market should enable the expansion of the company’s resource base in Norway. Woźniak did not finish his job because he was fired at the end of 2019, but left an increased number of PGNiG concessions in Norway and gas supply contracts, which will allow partial filling of the gas pipeline from 2023. It was also during the tenure of Naimski and Woźniak that at the end of 2017 the transmission system operators in Poland and
Denmark’s transmission contracts for the capacity of the Baltic Pipe gas pipeline. It is about 8.1 billion cubic meters.
Critics of Naimski, however, accuse other gas projects during his tenure that were not carried out or that they were delayed “caught.” This involves expanding the gas terminal to 8.3 billion cubic metres/year. This will be delivered at the end of 2023. – A year after it was originally planned – tells one of the interviewees. The second argument that would argue for a slowdown in gas infrastructure expansion is the failure to build a second floating gas port in Gdańsk, which could now increase gas supplies in the domestic market thanks to increased LNG stocks. According to our discussions, this could have come about much earlier than Minister Naimski had planned in 3-4 years. However, it is worth remembering that the project was awaiting support from the European Commission and the list of projects of common interest, which will allow the project to be co-financed from European funds.
Projects such as a gas connection with Lithuania or a connection with Slovakia, which will be completed at the end of this year, have also been completed. It has failed to build new gas connections to Ukraine and the Czech Republic, but in both cases the reasons for the delays are more complex and overlap with geopolitics.
Poland passed the oil test
Naimski also oversaw PERN (Przedsiębiorstwo Eksploatacji Rurociągów Naftowych “Przyjaźń”). Naftoport, owned by PERN, was able to reload more crude oil and fuels thanks to the expansion of the storage infrastructure. PERN’s crude oil storage facilities have increased from 3.1 million to 4.1 million cubic meters in 7 years. The oil terminal, which had already been expanded with new gas storage facilities, enabled Poland in 2019 to pass the test of independence from Russian oil flowing through the Druzhba pipeline. Due to oil pollution from Russia, no oil from this direction was sent to Poland via the Druzhba pipeline for 46 days. Yet there was no oil crisis in Poland.
Naimski’s successor will be tasked with completing construction of the second line of the Pomeranian oil pipeline, which will allow greater supply of crude oil and petroleum products to Poland to the country. It will also make it possible to increase Germany’s independence, thanks to the increased transfer of non-Russian oil to our western partner.
Unfinished networks await companies
The expansion and modernization of transmission networks, under the responsibility of Polskie Sieci Elektroenergetyczne, takes several years and is determined by investment decisions of companies interested in using the lines and expanding the network. PSE regularly publishes network development plans, which however depend on political decisions. These were delayed, for example by postponing the approval of the Polish energy policy until 2040. Without the approval of this document and the government’s decision to sanction the construction of nuclear and offshore wind farms, plans to shut down the grid in this regard were expand uncertain . The preparatory work began when the government decided to make these investments. This concerns the Transmission Grid Development Plan up to 2030. The degree of conditionality of investments changed along with the government’s decision to implement specific investments in energy sources.
Poland has broken gas deals with Russia
The Polish government has terminated the contract for gas supplies from Russia and the agreement on the construction of gas pipeline systems for the transit of Russian gas through the territory of the Republic of Poland ahead of schedule. Transit to Germany is still possible, but only upon receipt of a transfer request from Gazprom.
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In terms of image, PSE could be disadvantaged at the beginning of July due to problems with capacity availability. PSE has the capacity of the power stations available to the company. These in turn reported problems with the availability of coal.
Naimski’s successor will be: responsible for the implementation and implementation by PSE of the Development Plan to meet current and future electricity demand for 2023-2032, which is required, among other things, for electrical evacuation of offshore wind farms and a nuclear power plant.
We hear from government leaks that the nuclear project was “shrouded in secrecy”, which was supposed to be an obstacle for other members of the government to learn more about the project. Polish Nuclear Power Plants, a company founded in 2021, informed about the next milestones in this project, which had been delayed for several years and even reached previous governments. The most important report this year was the report on the environmental impact of the nuclear power plant to be built in Pomerania. At the end of March it was presented to the General Director of Environmental Protection. It indicates the potential location in the area of municipalities: Choczewo or Gniewino and Krokowa. The Achilles heel of the project was the financial model, the choice of which was delayed by years due to the actual start of the project. Finally, in the Polish nuclear energy program it was decided to include the following: “Ultimately, after selecting one strategic co-investor associated with a technology supplier, the state treasury will retain at least 51 percent shares in the company”. However, it does not determine how a foreign investor will be able to earn from this investment of about 100 billion PLN.
Where are we with the nuclear project?
The French EDF and the Korean KHNP have submitted first bids. The closest, however, are the Americans from Westinghuose, and here we are at the stage of implementation of the Polish-American intergovernmental agreement. A report is expected to be presented at the end of August detailing the US bid for Poland regarding US participation. It should be ready by the end of August and then the government will have a basis for choosing the technology. This is expected to happen at the end of this year. Although we must bear in mind that it should have happened a year earlier, and not after the late ratification of the Polish-American cooperation document signed on October 22, 2020. People close to the matter also emphasize that the indication in the Report on the Environmental Impact of US Technology (AP1000) does not prejudge the matter, nor does an intergovernmental agreement, which does not specify and prejudge the choice of technology.
Minister Naimski’s successor is waiting for the completion of the diversification process in the oil and gas sectors and the preparation of transmission networks for greater uptake of renewable energy and nuclear energy from Pomerania, which will be the energy state of Silesia in the coming years. The implementation of a nuclear project can be a test of the effectiveness of its successor, regardless of the cost. In the energy sector, such situations are called stranded costs, ie the costs of investments made that cannot be withdrawn from the market. Investments in energy infrastructure, which have been overseen by Naimski, are often of this nature.