An interview with Piotr Woźniak, former president of Polskie Górnictwo Naftowe i Gazownictwo (PGNiG), Poland’s largest gas company. Interviewer: Mykola Voytiv

MYKOLA VOYTIV: If we look at prices and the war, what do you think awaits the European gas market?

PIOTR WOŹNIAK: The sharp rise in natural gas prices was caused by increased demand from the European Union in November and December 2021 – Russia expected this and prepared by not pumping natural gas into underground gas storages in the Netherlands, Austria and Germany. Russia’s aggression in Ukraine only intensified this dynamic. Keep in mind, that natural gas prices are a relative concept. Whilst some are fixed in bilateral contracts for gas supply, such as Russian natural gas, natural gas from the Norwegian continental shelf, or LNG, others are priced in line with European energy exchanges and hubs.

Inaction will never stop the Russian onslaught, as it provides the invaders with confidence in their own actions. The silence of the observers only emboldens the perpetrators. Inaction is complicity in their crimes.

Ukraine’s gas transmission system is one of the most extensive networks of gas pipelines in the world. The role of the Ukrainian system, in the functioning of the pan-European gas transit infrastructure, is extremely important in the strategic economic and energy security contexts of life in Europe.

When we talk about Nord Stream and Nord Stream 2, we cannot consider these large-scale projects in economic terms alone. What is more, from the point of view of financial and technical indicators, they are not justified. The capacity of the Ukrainian gas transmission system (GTS) at the entrance is 281 billion cubic meters per year with an output of 146 billion m3 per year. Almost 50 per cent of natural gas from Russia to European countries until 2019 was transported via the Ukrainian GTS. Today, unfortunately, the situation is not the same.

Ukraine is the eighth country in the world in terms of nuclear power plant capacity. The country is now in the process of repairing, modernising and finding new technologies to meet the electricity demand. However, a focus on management and transparency is still necessary in order to have a safe, effective and publically profitable nuclear power sector.

Nuclear energy began to develop actively and significantly in the second half of the 20th century. This boom was primarily due to the dynamism felt in all sectors of industry which was based on large numbers of labour and massive electricity demands. Yet, the beginning of the 21st century started to see a decline in this sector. Today competition in the energy sector contributes to the fact that energy markets are developing very rapidly and energy resources are becoming more affordable.

On August 31st 2019 a Memorandum of Understanding was signed in Warsaw to strengthen gas security in the region through LNG supplies from the US via Polish and Ukrainian infrastructure. This formal document may lay the foundations for developing a new natural gas trading market in Europe.

Free of political barriers, access to a diverse range of energy sources is necessary for effective industrial development. European economies have become increasing concerned with energy security. This is largely the result of growing desires to end a dependence on supplies of gas and oil from the Russian Federation. The diversification of energy sources guarantees supply and promotes market liquidity. What actions should be taken in order to ensure this diversification? Will the Ukraine-Poland Interconnector and Baltic Pipe be able to guarantee a continuous supply of gas to the Polish and Ukrainian markets? What are the challenges faced by companies which manage infrastructural projects in the natural gas sector?