WATCHING THE WORLD POLAND'S PROMISE FOR GAS INVESTMENT

With David Knott from London Natural gas demand is set to flourish in Poland. Elizabeth McCrary, associate director of Cambridge Energy Research Associates, Paris, identified three pointers to a steady growth market. Six million out of more than 13 million Polish homes are connected to a gas supply, but this is a recent development. Gas contributes only 8.5% to primary energy use.

June 14, 1993

3 min read

Natural gas demand is set to flourish in Poland.

Elizabeth McCrary, associate director of Cambridge Energy Research Associates, Paris, identified three pointers to a steady growth market.

Six million out of more than 13 million Polish homes are connected to a gas supply, but this is a recent development. Gas contributes only 8.5% to primary energy use.

Gas price subsidies have been virtually eliminated in Poland, providing internal cash resources and an investment framework for expansion of the gas network. And Poland is well placed as a route for new gas supplies to Europe.

"Success in fulfilling this undoubted potential will revolve around the form of privatization and restructuring of the Polish gas industry," McCrary said. "This could open the government owned Polish Oil & Gas Co. (POGC) to foreign capital and strategic alliances."

NEW LICENSING

Poland's government is aware of the potential, announcing a licensing round for 27 oil and gas exploration blocks near Lublin and in the Carpathian mountains southeast of Krakow. This follows last year's first round for conventional and coalbed methane prospects (OGJ, July 20, 1992, p. 40).

POGC is preparing technical data packages on the blocks and intends to participate in nine blocks near Lublin. The company also is seeking a joint venture partner to operate Ciercierzyn-Metgiew gas field near Lublin.

Simon Petroleum Technology, Llandudno, North Wales, is handling the marketing. A promotional seminar will take place June 22 in London.

The Polish government plans to increase the natural gas portion of primary energy supply to 12% by 2000. This will jump natural gas consumption to 450 bcf in 2000 from 300 bcf in 1992.

McCrary said Poland's gas production could increase substantially. Production was 90 bcf in 1991. This is expected to double by 2000 via increased flow from existing fields and from new discoveries.

IMPORT OPTIONS

Even with this increase, domestic production will provide no more than 40-50% of Polish demand, making imports essential. Russia sent nearly 200 bcf to Poland in 1992, but diversification of supply is now a priority.

Four options are under discussion. A western route is planned to take 35 bcf of North Sea and Russian gas from the German grid in Saxony into Silesia starting this summer.

A northern pipeline from Denmark via the Baltic Sea could carry British, Norwegian, or Danish gas starting in late 1997. An eastern link to the existing Northern Lights pipeline could bring gas from Tyumen province and the Barents Sea.

More fancifully, a southern option involves an LNG plant on the Croatian island of Krk to receive gas from Algeria. Ethnic conflicts in the region and high costs are among hurdles that make this the longest shot of the four.