Baltic Pipe Project: The prospect of Poland freeing itself from its dependence on Russia for its power supplies has moved one step closer to reality. This Monday, the chief executive of the country’s state-run gas transmission system operator Gaz- System Tomasz Stepien announced that the financing for the Baltic Pipe Project would be fully in place by the end of month.
The project will link the gas fields on the Norwegian shelf in the North Sea to Niechorze-Pogorzelica on the northern Polish coast, and is scheduled to become operational in October 2022 – just as Poland’s long-term deal with Russia’s Gazprom comes up for renewal. Historically, Poland has been the biggest importer of gas from Russia which has regularly supplied it with well over 50% of its annual energy requirements.
Although in recent years it has looked to LNG imports from Qatar and Norway to counter this dependency, the difference has been marginal. With the capacity to supply 10 bn m³ of gas each year – considerably more than Poland’s current requirements of around 7 bn m³ – the €1.6 billion Baltic Pipe Project promises not just to eliminate Poland’s dependency on Russia, but to make it a regional gas hub into the bargain.
“This [ratification of the financing arrangement] is very good news for Poland,” President Andrzej Duda told a press conference on Monday. “If we are talking about full diversification of gas supplies to Poland, if we are talking about full independence of Poland as a recipient from Russia, this is a milestone. I deeply believe our country will benefit from this for many years to come.”
As well as giving Poland the opportunity to establish itself as a Central European energy hub, the Baltic Pipe Project could also serve as a key element within the Three Seas Initiative’s vision of a north-south corridor. Also known as the BABS Initiative, the Three Seas is a forum of the twelve EU states that lie between the Baltic, Black and Adriatic seas. Set up in 2016, its aim is to create a regional dialogue on various issues common to its members. Energy is high on the agenda.
Ready to bounce back
Duda’s upbeat reaction to the Baltic Pipe Project’s potential reflects a general air of optimism in Warsaw that may well prove to be justified. While warning that the immediate outlook is as bleak as almost anywhere else, independent analyses suggest that Poland may be better placed to get back on its feet relatively quickly compared to many others.
In April, the World Bank posted that a prolonged outbreak of the virus would in the short term almost certainly curb economic activity, adversely affect supply chains and depress both investor sentiment and consumer demand. However, it also suggested that Poland had the fiscal and monetary space to mitigate their impact and to bounce back quicker than many of its European neighbours. The following month, the Fitch credit rating agency downgraded Poland’s economic growth forecast in 2020 to minus 3.2 % year on year from the minus 1.7 % it had preciously forecast – but at the same time raised its growth forecast from 4.3% to 4.5%. It also predicted that private consumption in Poland would fall by 5% in 2020 but rise by 5.1% in 2021, effectively taking it back to square one.
A lot of countries would happily settle for that right now.