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Gazprom’s Polish Test

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Vladimir Socor has an interesting piece over at Eurasia Daily Monitor on Gazprom’s negotiations for an increased supply agreement to Poland’s PGNIG, and the limitations of recent EU legislation designed to limit monopolies in the energy trade.

Gazprom does not treat the proposed 3 bcm annual increase in deliveries to Poland as a normal commercial transaction. Instead, it wants to entangle the new agreement into a web of linkages that would perpetuate Polish dependence on Gazprom. To that end, it insists on the following points (Gazeta Wyborcza, August 31; Kommersant, September 2, 7, 13, 27):

1) Packaging the new agreement with the 1993 inter-governmental agreement on transit of Russian gas via Poland and deliveries to Poland, which runs to 2022; and setting the duration of deliveries by contract until 2037. All this would help Gazprom to continue monopolizing the Polish market for that duration, preventing diversification of Poland’s natural gas imports and discouraging investment in the LNG project.

2) Exclusive right for Gazprom to use the Yamal-Europe pipeline in Poland until 2045. This would consolidate Gazprom’s position in Poland and Germany for another generation.

 

3)Europolgas to retain ownership as well as commercial and otheroperating rights on this pipeline. Thus, Gazprom would be able to lockout any competitors, also precluding reverse-use of this line.

4)Poland’s national transmission operator, Gaz-System, to becometechnical operator of Yamal-Europe in Poland, limited to a serviceprovider’s role. This would fall far short of the operator’sindependence from the supplier.

5)Deeply discounted transit fees to remain in force on this pipeline. Thediscount is intended not only for Gazprom’s profit, but also to deprivePoland of plough-back funds for modernizing this pipeline independentlyof Gazprom.

6)A ban on Polish re-export of Russian gas to third countries, with aright for Gazprom in that case to reduce its gas supplies to Poland by acorresponding amount. This is in line with Gazprom’s traditionalthird-country clause, irreconcilable with the EU’s gas marketlegislation.