Natural gas overview
Poland’s demand for natural gas has increased over the decades, although it plays a relatively small role in Poland’s energy mix. Poland is a small producer of natural gas with domestic production stable at around 4 bcm per year, as of 2021. Despite the increased demand, gas still plays a relatively small role in Poland’s energy mix. Poland is a small producer of natural gas with domestic production stable at around 4 bcm per year from 2009 to 2020.
Poland’s energy policy aims to use natural gas as a transition fuel in pursuing its long-term goal of a zero emission energy system. Consumption of natural gas in the country is set to rise by close to 50%, to 30 bcm by 2030, as the share of coal is reduced in electricity generation and building heating. Poland has plans to increase gas import capacity and expand gas infrastructure, and is developing a liberalised gas market. The country aims to use natural gas infrastructure to support the increased use of biomethane and the development of a market for low-carbon hydrogen.
Expiration of a long-term supply contract with Russian Gazprom by the end of 2022, will pose additional challenges to secure stable gas deliveries, especially in view of the expected significant increase of consumption over next decade.
Diversification of supply sources and routes, development of natural gas infrastructures, expansion of underground storage capacity and of domestic gas production are the key elements of Poland’s gas security policy. The Act on Stocks requires that sellers and end-users importing natural gas maintain mandatory stocks covering 30 days of imports that can be delivered within 40 days to the Polish gas system.
Natural gas infrastructure
Networks: transmission and distribution
Poland has a well-developed and interconnected natural gas network that supplies domestic gas demand and supports flows between the Russian Federation and Western Europe. The gas network covers72% of the territory of the country in 2020 and is expected to grow fast in the next years. Poland is engaged in several diversification projects to significantly increase import capacity post-2022, when the supply contract with Gazprom expires.
In 2020, the length of the transmission network owned by OGP Gaz-System S.A. amounted to 11 056 km (together for E and Lw sub-systems), of which 268 km of new pipelines were added in 2020 to the E system. The TSO is planning to significantly expand the transmission network with around 2 000 km of new pipelines in western, southern and eastern parts of Poland by 2025.
LNG terminals and interconnections
The LNG terminal in Świnoujście was opened in 2016 and has a maximum regasification capacity of 5 bcm (54.4 TWh) per year. The operator of the Terminal is Polskie LNG S.A., 100% subsidiary of the Gaz-System (the only gas TSO in the country). All regasification capacity of the terminal has been reserved by the PGNiG. In June 2021, Polskie LNG announced a project to increase the LNG terminal capacity from 5 bcm to 8.3 bcm of natural gas imports by the end of 2023.
In addition to the LNG Terminal in Świnoujście, Poland has seven major pipeline interconnections with Germany, the Czech Republic, Ukraine, and Belarus.
Current import capacities will more than double when all planned diversification projects are commissioned, including expansion of the LNG terminal (additional 3.3 bcm), the Baltic Pipe (10 bcm), the FSRU (4.5 bcm), the Gas Interconnector Poland-Lithuania pipeline (1.9 bcm) and the Poland - Slovakia interconnector (5.7 bcm). Most of the new projects received grant support from the European Union and have the status of EU Projects of Common Interest. All interconnectors operated by the Polish transmission system operator, state owned Gaz-System, can operate with bi-directional natural gas flows.
The current and new supply routes for gas imports will be accommodated by investments in approx. 2 000 km of new transmission pipelines in western, southern and eastern parts of Poland by 2025, and further development of the distribution grid.
Gas storage facilities
In 2020, Poland had 3.3 bcm of gas storage capacity connected to the E system (equal to 16.7% of 2020 demand). E system storage is composed of five storage facilities in depleted natural gas reservoirs (Husów, Wierzchowice, Swarzów, Brzeźnica and Strachocina) and two storage facilities in salt caverns (Mogilno and Kosakowo). Poland also has 0.2 bcm of gas storage capacity connected to the high nitrogen Lw system (equal to 20% of 2020 demand for high nitrogen natural gas).
Gas Storage Poland (a subsidiary of PGNiG) owns and operates the E system storage facilities, while PGNiG directly owns and operates the Lw system storage facilities. PGNiG has recently invested to expand the storage capacity of the E system. In 2020, 0.1 bcm of capacity was added to the Wierzchowice storage facility. In 2021, 0.06 bcm of capacity was added to the Kosakowo storage facility. PGNiG is considering further expansion of the E system to maintain system balancing in line with the expectations of higher gas demand.
To ensure that peak demand can be met, underground storage is normally filled close to capacity before the start of the winter gas season.
Poland’s most recent Risk Assessment, conducted by the Ministry of Climate and Environment, identified the most serious threats to the security of gas fuel supplies to the country, based on past events and possible occurrences. The analysis has shown that the existing infrastructure can cover demand for natural gas by domestic consumers on a day of exceptionally high demand, even in case the largest single element of this infrastructure is disrupted. The so-called N-1 ratio calculated for the purposes of the Risk Assessment was 118.2%, which means that the existing infrastructure allows to meet the needs of customers for natural gas in the event of failure of its largest single element (Yamal-Europe gas pipeline), and even then has a significant reserve capacity (although the index dropped from the level of 133.9 in 2016 when the consumption was lower). On the basis of detailed analysis of natural gas flows in the transmission network, it was concluded that the national gas system is vulnerable to the complete suspension of natural gas supplies from the eastern direction in certain specific cases, i.e. simultaneous occurrence of an unusually high demand for natural gas and the prolongation of the disturbance over an extended period.
Poland’s natural gas infrastructure, 2022
Gas emergency response policy
In the event of supply disruptions or exceptionally high demand for natural gas, energy companies are obliged to take measures to ensure natural gas supply to their customers, in particular those belonging to the category of protected customers (protected customers consume 6.9 bcm of natural gas per year).
For this purpose, energy companies are obliged to have procedures in place to deal with:
- occurrence of disruptions in the supply of natural gas to the gas system
- unpredictable increase in natural gas consumption by customers.
The procedures should define, in particular, the manner of:
- activation of additional supplies of natural gas from other sources or directions,
- reduction of natural gas off-take by customers, in accordance with contracts concluded with them, not being curtailment.
In the event of an emergency, market-based instruments should have priority in mitigating the effects. In a situation where all relevant market-based measures are insufficient, in particular for the needs of protected customers, it is possible to introduce additionally non-market-based measures, which include the release of mandatory stocks and the introduction of restrictions on natural gas off-take.
Restrictions on natural gas off-take consist of temporary limits to the maximum hourly and daily off-take in the whole or part of the country. In 2021, a new regulation on the manner and procedure for introducing restrictions on natural gas off-take was adopted. The new regulations introduce a definition of protected customers that are not subject to restrictions, including, households, entities providing social services such as clinics, hospitals, schools, etc., as well as small and medium-sized companies.
The Minister of Climate and Environment is the competent authority responsible for security of natural gas supply and is supported by a Natural Gas Supply Security Team (the Polish gas NESO).
The costs incurred by enterprises/importers to fulfil their obligation are considered as justified costs of their operations and could be included in tariffs. Compulsory gas stocks are held at the disposal of the Minister of Economy. These stocks may be released by the operators of the gas transmission system or of the consolidated gas systems immediately after receiving permission from the Minister of Climate and Environment.
The Council of Ministers has the right to impose restrictions on consumption while defining the method, duration, eligible consumers etc. There is very limited possibility of increased domestic production in a crisis situation.
The Polish government has no legal authority or policy to promote fuel switching away from natural gas in an emergency. Gas-fired power plants are not legally required to hold backup fuel stocks on site.
Obligation for emergency gas storages
The legal framework for Poland’s security of gas supply is regulated in two acts: the Energy Law and the Act on Stocks. Both acts are directly linked with provisions of EU Regulation No 2017/1938 concerning measures to safeguard the security of gas supply. The Act on Stocks requires that sellers and end-users importing natural gas maintain mandatory stocks covering 30 days of imports that can be delivered within 40 days to the Polish gas system. The mandatory gas stocks in Poland are commingled with commercial stocks. As of December 2020, 15 entities were obliged to hold mandatory stocks. Mandatory stocks of natural gas are controlled by the Minister of Climate and Environment, and stocks may be released immediately after obtaining the consent of the Minister. According to the law, the President of the Energy Regulatory Office (ERO) verifies the volume of mandatory stocks held by companies and sanctions irregularities.
The Act on Stocks requires all sellers and end-users importing natural gas to maintain mandatory reserves of natural gas for use during emergencies. The President of ERO verifies the information submitted by the companies on the amount of mandatory gas reserves they have to establish; determines the amount of mandatory reserves for entities planning to start purchasing natural gas from abroad or applying for a licence to foreign trade in natural gas; monitors the fulfilment of the obligation to maintain mandatory stocks and sanctions any irregularities related to mandatory stocks. Under the Act on Stocks, energy companies are obliged to have procedures in place to deal with disruptions in the gas supply and unpredictable increases in natural gas consumption by customers. The procedures must define the manner of providing additional gas supply and how reductions of gas demand can be achieved in accordance with contracts suppliers have with their consumers.
The amendment of the Act on Stocks of 2017 imposed on importers of gas to Poland the obligation to book continuous capacity on interconnectors in the event that they held obligated gas stocks abroad. Booking capacity is to ensure that in a crisis situation stocks can be brought into the Polish system within 40 days as the law stipulates (in a crisis it may be a problem to find pipeline capacities to bring back stocks to Poland). These interconnector capacities cannot be used for other purposes of a company, such as commercial flows.