Caspian Energy (CE): Poland occupies a very important geo-economic position in the EU, what could you say about the current economic platform of the Weimar and Lublin triangles? What functions do they perform in the real economy today and how do they contribute into the growth of GDP?
His Excellency Mateusz Morawiecki, Prime Minister of Poland: The strength of the Weimar and Lublin triangles lays in their member states, also in terms of their economic cooperation and common goals. We do believe that together we can do more. We recognise the further development of economic and social cooperation within these initiatives as key to a better future for Central and Eastern Europe. We have common interests in protecting free trade in the global economy and strengthening the EU’s competitiveness. This results in, for example, the support for reform of competition policy.
CE: The government has recently announced the creation of a large state-owned monopoly through the merger of two oil and gas companies, PKN Orlen and Lotus, is this a step away from the principles of competition and free market declared by the European Commission?
Mateusz Morawiecki: With this merger we are opening the Polish market to the extend beyond general comprehension. The merger will allow Poland to preserve its energy security and assure its transition to a green economy: if we are to achieve the goal of the new recovery plan we must have entities like Orlen after merger that have projects ready to implement. We need that merger to build wind farms and invest in hydrogen. No doubt the combined entity will be able to bear some of the costs of decarbonizing Polish energy. Full coordination of oil purchases, logistics and production will allow agile responses to the dramatically changing market environment. A restructuring of the wholesale fuels market in Poland, especially by facilitating imports and integrating Polish fuels markets with the rest of Europe would not be possible without the transaction.
CE: Which projects are being developed jointly with Azerbaijan and with the countries of the Caspian region? Which areas of industry do you consider the most promising?
Mateusz Morawiecki: For several years, we have been striving to strengthen economic cooperation with the countries of the Caspian Sea, including Azerbaijan - by tightening or establishing new business contacts. We have proved that despite the geographical distance, close trade and technological cooperation between our countries, as well as closer relations between companies of both countries, are possible. I would like Polish companies to better use the opportunities offered by the Azerbaijani market and vice versa. Polish entrepreneurs from various sectors offer very high quality products that certainly meet the requirements of Azerbaijani consumers and business partners. We look to the future; we try to adapt our economies to the latest developments. Poland, as well as Azerbaijan, is interested in digital transformation and modern agriculture, and we are committed to digitizing our economies.
CE: How does Poland feel about the climate change problem and its impact on the economy of Poland and its partners? Do you think the mankind is capable of solving this problem?
Mateusz Morawiecki: Nowadays, climate change is a serious challenge. Temperature increase and droughts cause great losses in the Polish agricultural and fruit farming sectors, which are an important segment of Polish production and exports. We believe that we should combat climate change, insofar as it is caused by man. We are pleased that thanks to joint action by EU countries, emissions from electricity generation in the EU fell by a record 12% in 2019, which is 120 million tons. Such initiatives should be taken by all countries, including those responsible for the largest CO2 emissions to the atmosphere, such as China, the USA and India. Undoubtedly, it is often much more difficult for some countries to take such actions than for others. Poland knows this very well, because it inherited from the communist governments an energy mix, which is still largely based on coal. Nevertheless, Poland is currently undergoing an ambitious energy transformation that will allow it to change its energy mix to a low-carbon. We spend, depending on price, around USD 20 bn annually on imports of gas, oil, coal and energy. We want to be as independent as possible of such imports.
CE: Why do you veto the Nord Stream 2 project, isn’t Poland striving to replace coal, the main fuel element of the economy, with gas? Don’t you think this decision is more political than economic?
Mateusz Morawiecki: It needs to be clarified that Nord Stream 2 is a political tool to disrupt European solidarity and that strikes at the value of the European Union. We are glad that more and more countries are aware of the danger that the project entails. The EU’s reports indicate that Nord Stream 2 increases the Union’s dependence on Russian gas, threatens the EU internal market and is not in line with the EU’s energy policy, therefore this project should be suspended. Our American partners have also recognised this threat by imposing sanctions on Nord Stream 2. Being against that initiative doesn’t mean that Poland is passive when it comes to defending the free gas market in the region. We are currently focusing on the Baltic Pipe as a strategic gas infrastructure project to provide a new gas supply corridor on the European market. It will enable to transmit gas from Norway to the Danish and Polish markets, and the neighbouring countries. Soon, the tender procedure for the contractor of the Baltic Pipe section will be completed. The finalisation of the project is planned by October 2022. The annual capacity of the gas pipeline will be 10 billion cubic meters gas from deposits on the Norwegian Continental Shelf.
CE: The first consignments of gas will reach Europe early in 2021 along the Southern Gas Corridor pipeline laid from Azerbaijan to Turkey, Greece and further to Europe. Can Poland join this project and become one of the Eastern European gas hubs?
Mateusz Morawiecki: The crisis in relations with Russia over Ukraine has made Southern Gas Corridor more important for Poland and the EU. We see the corridor as an opportunity for a genuine diversification of gas supplies and for strengthening its position in dealing with Russia. Strategic investments in infrastructure and diversification of gas sources may constitute a recipe for ensuring energy security of Poland and the region. Poland is already becoming a gas hub. We are also consistently implementing the plan to expand the natural gas entry points to the national system. Therefore, in addition to the expansion of the LNG terminal and the construction of the Baltic Pipe gas pipeline in 2024-2025, we plan to launch a floating liquefied gas receiving terminal (FSRU) in Gdańsk. Poland is getting an important energy hub for its neighbours.
CE: Which other projects are being developed for the gradual withdrawal of the Silesia economy from coal extraction?
Mateusz Morawiecki: Between 1990 and 2017, the consumption of hard coal in Poland decreased by 56%. However, the process of moving away from coal cannot be carried out at the expense of Polish entrepreneurs, mine workers or citizens, it cannot lead to energy poverty, therefore this process requires time and appropriate strategic preparation. We implement projects that will help diversifying the Polish national power generation structure.
CE: Which measures are taken to increase the LNG import? Which countries are the most active suppliers?
Mateusz Morawiecki: LNG Terminal in Świnoujście has regasification capacity of 5 billion cubic meters per year. We plan to expand the gas terminal to the level of 7.5 billion cubic meters. Such an investment would be completed in 2021. Currently, the terminal’s capabilities are used in approx. 60%. So far gas supply contracts were signed with Qatar and American companies. The terminal in Świnoujście also received gas purchased under the so-called spot contracts. These are contracts for small volumes of supply, concluded instantly for the so-called spot market. Thanks to this, it is possible to make an immediate purchase of even one LNG transport, when necessary. So far, gas reaching Poland from the spot market has come from the USA and Norway.
Thank you for the interview
