Poland trims Russian influence with Qatar gas loan deal

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Poland sent a clear message of moving away from its dependence to Russia on Thursday (4 October), when it secured the final investments needed to start construction of its first liquefied natural gas (LNG) terminal, expected to start importing gas from Qatar in 2014.

The European Bank for Reconstruction and Development (EBRD) said it gave a 75-million, 12-year loan to Polish gas grid operator Gaz-System to begin building the terminal. The rest of the financing for the total cost of 660 million will come from the European Commission via grants, European Investment Bank and the company, from its own revenues.

"What this project really represents is a choice for Poland to receive one third of its gas from a country other than Russia for the first time," EBRD Managing Director for Energy and Natural Resources Ricardo Puliti said.

He added that this move is part of a strategy meant to ensure the security of energy supply to South-Eastern Europe. The project is of "very high" importance because it will allow for more gas to be available to neighboring countries Slovakia, Hungary and the Czech Republic and to "Central Europe as a whole", Puliti said.

The Baltic Sea facility will give Poland and its land-locked neighbours in central and eastern Europe access to the global LNG market, an alternative to gas supplied via pipelines from Russia's Gazprom on which Poland depends almost entirely for imports.

The terminal will receive oil-indexed gas supplies from Qatar, but two-thirds of its import capacity will be reserved for cargoes imported on a spot basis from elsewhere, potentially opening the door to cheaper energy.

Qatar occupies the top spot as the world's largest single producer of liquefied gas. Seaborne gas delivered by Qatari state-run exporter Qatargas, even though it is oil-linked, will likely undercut Russian pipeline gas and reduce its dominant position in Poland, Puliti said.

"By raising competition you are in a better position to re-negotiate long-term contracts with all suppliers," he said.

"The construction of the terminal in Swinoujscie is one of the most important investments currently being carried out in Poland," Treasury Minister Mikolaj Budzanowski, whose ministry oversees state assets, said in a statement.

Hopes to fix Gazprom row

It is hoped that supplier diversity will strengthen Poland's negotiating position in a row with Russia's Gazprom over gas prices that are linked to oil.

Russia's cash-strapped European customers are stepping up their opposition to oil-indexed gas supplies while the European Commission is investigating Gazprom over suspicions that it hindered the free-flow of supply across the continent.

Previous disruptions to Russian gas supply have fuelled the debate in Poland about its reliance on Moscow.

Its 15 billion cubic metre/year gas market relies on Russia for almost all of its imported supplies and poor connections to nearby European markets hamper attempts to diversify with pipeline supplies.

"Energy security in Europe is a major issue that has come out very importantly starting 2009, because then we experienced shortages of gas especially in Central and Eastern Europe due to a kind of problem  between Russia and Ukraine and the transportation of gas. From that day, the EBRD has worked with the European Commission in order to enhance the security of supply of Europe," said ?Riccardo Puliti, EBRD managing director for energy.

In its efforts to reduce its energy dependence from Russia, Poland has made efforts to build an LNG gas terminal on its Baltic coast.

In 2010, Berlin opposed to Poland receiving an EU grant to construct such a terminal due to environmental concerns. But the Polish press argued that the real cause of Germany's unease is that the new terminal would compete with the Nord Stream gas pipeline, which links offshore Russia to Germany.

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