IEA: POLAND CORRECT IN ECONOMIC CHANGES

Poland, in its move from a centrally planned economy to a market economy, is rightly giving priority to reform of energy prices. The country also is correct in creating a framework that gives enterprises and individuals the incentive to respond to price signals. So says the International Energy Agency in its first assessment of a national energy program for a country outside lEA. But, IEA says, achievement of Poland's objectives could prove more difficult than expected.

July 1, 1991

3 min read

Poland, in its move from a centrally planned economy to a market economy, is rightly giving priority to reform of energy prices.

The country also is correct in creating a framework that gives enterprises and individuals the incentive to respond to price signals.

So says the International Energy Agency in its first assessment of a national energy program for a country outside lEA.

But, IEA says, achievement of Poland's objectives could prove more difficult than expected.

The Warsaw government is seeking to improve energy efficiency and increase contributions to energy supply from natural gas and nuclear power.

If those goals are not achieved, IEA warns, Poland will face an unpleasant choice between expanding coal production, increasing coal imports, or making greater use of oil.

The Polish energy sector is marked by use of large amounts of energy per unit of economic production, undue dependence on coal, and almost total dependence on the Soviet Union for imports of oil and gas. There also is severe environmental degradation from energy production and use.

Energy prices have been kept very low and despite recent big increases are still well below economic levels.

Warsaw is trying to step up oil and gas production via programs with foreign operators (OGJ, June 17, p. 19).

GAS SUPPLY

In 1989 Poland used 1.2 bcfd of natural gas and 300 MMcfd of manufactured gas, IEA figures show. The Soviet Union is responsible for 65% of natural gas supplies under complex barter arrangements.

The medium term growth scenario assumes an increase in gas demand to 2.03 bcfd in 2000.

Polish Oil & Gas Co. (POGC) believes domestic production, which currently uses outdated methods, could be increased from 387 MMcfd in 1990 to 677 MMcfd in 2010. Coal bed methane, currently 19.35 MMcfd, might also be expanded.

Increased gas consumption will require increased imports, IEA predicts.

Poland is considering imports of LNG from Algeria, possibly as part of a group with Czechoslovakia and Hungary.

OIL CONSUMPTION

Oil's share of Poland's total primary energy supply is about 14%, the lowest in Europe, reflecting the importance of coal, absence of significant indigenous resources, and the small number of automobiles in the country.

Poland's oil consumption is expected to rise from 340,000 b/d in 1989 to 600,000 b/d by 2010. Polish oil fields produce about 2,000 b/d. The rest is imported, mainly from the Soviet Union.

In 1990, Poland was a net importer of gasoline and diesel oil and a net exporter of fuel oil.

The dominant position of Centrala Producktov Nattovych CPN in oil imports was slightly dented by independent enterprises importing oil for the first time. This independent trade is expected to decline this year because of increased taxes on imported products in the first quarter of this year, which will be increased again later in the year.