The gas market from the inside

Last week I attended another edition of the Trading Forum organised by the Polish Power Exchange and the Commodity Clearing House. It is an extremely valuable insight into the market from the side of its participants.

During the meeting, we discussed several topics worth sharing. They show the role of gas in energy security, as well as a return to a market heavily influenced by geopolitical factors. In Poland, we not only have something to discuss, but also something to boast about.

Gas stocks in the EU

Thanks to the Polish presidency of the Council of the EU, an informal agreement has been reached on the extension of the EU gas storage system until 31 December 2027. This provision is aimed at ensuring security of gas supply before the winter season. Gas storage facilities provide 30% of the Union’s gas consumption during this period.

The agreed text will allow Member States to achieve the 90% fill target at any time between 1 October and 1 December. Member States have been given more flexibility in this regard. However, the objective remains unchanged: full independence from imports of this raw material from Russia.

It is worth noting that the introduction of the 2022 changes was piloted by Jerzy Buzek, whose contribution to energy security in Europe is immense. Today, this is continued by Borys Budka, chairman of the Committee on Industry, Research and Energy, who is rapporteur for this topic in the European Parliament.

Polish law on stocks

Polish parliamentarians have addressed an amendment to the law on oil and gas stocks, in which the Government Agency for Strategic Reserves is to play a key role.

According to the draft, the Government Agency for Strategic Reserves will be responsible for the creation and maintenance of gas stocks. Gas purchases and storage costs by RARS will be financed from the Natural Gas Intervention and Strategic Reserve Fund, fed by a monthly fee paid by the companies contracting the gas transmission service. The new solutions bring Polish law in line with EU regulations.

Is such a change necessary? I definitely think so. Even taking into account the fact that we, as Poland, have done the biggest diversification job among EU member states. We have taken the weapon out of Russia’s hand in the form of blackmail related to the supply of this raw material. We are also helping other countries on their way to this form of security. However, the stock law also has a strong impact not only on our market in Poland in terms of security. It gives traders more flexibility and may result in more trading on the stock exchange, which must certainly be seen as a positive effect. This project is an opportunity for competition in the gas market. The prices of this commodity are falling worldwide and it is in our common interest that this trend is equally visible on the TGE.

Transformation and the gas hub

Other topics of the meeting oscillated around the macro scale. This was the tone of, for example, the roundtable on the role of gas in the transformation. In this context, I emphasised a strongly realistic approach. There is a challenge on the way between RES and nuclear power.

It is called the capacity gap, and the remedy is flexibility. Given our reality, the path and the pace of the transition, it is fair to say that we now necessarily need gas for stability and security. I have devoted considerable space to this in previous posts.

During the Trading Forum, the topic of the gas hub also came up again and again. After Russia’s attack on Ukraine and in view of the ongoing war, this topic has taken on new importance. Poland is Europe’s forerunner when it comes to diversifying supplies to avoid fuel from Russia. Today it is particularly clear how important it was to expand our import infrastructure.

Ukraine wanted to follow the same path. I am familiar with these realities and plans because I worked for the Ukrainian transmission operator and contributed to building this independence. The war thwarted the plans.

However, it is difficult to go into details, especially as, as a result of geopolitics, the gas hub is a political topic at the European level and an element of security in the broadest sense. In view of the uncertain situation related to the war in Ukraine, Poland, with its infrastructure and tools, seems optimal to be such a hub.

We have a very important gas port in Swinoujscie, the Baltic Pipe connection, gas connections with Lithuania, the Czech Republic, Lithuania and Slovakia and with Ukraine, where Gaz-System has recently offered increased capacity. In addition, the Company is building an FSRU terminal, which will further increase the security of natural gas supplies to Poland. All this consolidates Poland’s strong position in the gas market throughout the region.

The value of such meetings as those held during the Trading Forum is the lively discussion and substantive exchange of arguments, especially when we do not agree on everything.

For such a constructive attitude, I would like to thank the co-panellists: Stanisław Brzęczkowski from Gaz-System, Roland Wojtan from Orlen SA, Mariusz Ochocki from the management board of PGNiG Obrót Detaliczny and the interviewer Jarosław Ziębiec, vice-president of TGE.