Polish gas storage laws need a "proper overhaul" to enable easier access and increase competition, which is the only way to challenge state-controlled PGNiG's dominance of the market, European Federation of Energy Traders (Efet) head of Polish affairs Pawel Lont has told Argus.
Poland's storage law obliges gas-importing companies to maintain stocks covering 30 days of imports that can be delivered within 40 days to the Polish gas system. Importers can also keep inventories outside the country, but must hold aside the transport capacity needed to import all the required supply within 40 days. A ticketing service in the form of call options is offered by PGNiG and the state agency for strategic reserves, but it "does not resolve much nor does it make it much cheaper", Lont said.
This obligation is the "key problem… that prevents market participants from challenging PGNiG", which is almost the country's only gas importer, Lont said. PGNiG and its subsidiaries had an 89pc share of total sales in 2022, the highest since 2014, energy regulator URE said (see graph). Efet has long been critical of the law, which it says acts as a significant barrier to market entry. Storage operations need a "proper overhaul in Poland, as they are very expensive and offer little flexibility", Lont said.
A related issue is the licensing process, he said, adding that 21 storage licences were revoked last year as a result of companies being unable to use them. These laws create an "unwelcoming environment" that serves to "protect the incumbent", which is the only beneficiary of these policies, Lont said.
A separate problem for the Polish market is that the amount of gas that PGNiG is obliged to trade through the exchange was lowered last year, and can now be "easily changed by the minister through issuing a decision at any time", Lont said. The failure to turn Poland into a liberalised gas market has been the result of a lack of interest from those responsible for doing so, he said.
Further compounding PGNiG's dominant position, the firm is the sole capacity holder at Poland's 4.8mn t/yr Swinoujscie LNG terminal for the long term, and it will be for the planned Gdansk terminal too unless a second vessel is included in the project, something being assessed in open seasons held by project operator Gaz-System.
It is "not clear if and how unused capacities will be reoffered to the market", and PGNiG is the sole beneficiary of discounted entry tariffs from Swinoujscie, which are set at zero, he said. The long-term nature of PGNiG's capacity bookings at the terminals block access to crucial import routes for other companies, creating a "real distortion" in the market by reducing opportunities for diversification of flows and contracts, he said. That said, Gaz-System enabled the resale of capacities and services at Swinoujscie on the secondary market in March.
Following the merger between PGNiG, Orlen and Lotos, the new Orlen group has significantly more resources than the individual companies had previously, which is detrimental to competition in Poland, Lont said. But he hopes that since the company is now so large, it will no longer need protection from the state and other companies will be able to compete more freely. This could explain why Poland is pursuing amendments to the storage law only now, after completion of the merger, Lont said.
Overall, what matters is whether there is "real will from the authorities to establish choice for consumers, or is it just a move to ensure enough compliance with the EU acquis to stay under the radar", Lont said. "If the hub is to be liquid and attractive, they need to open up to competition", including pushing ahead with reforming storage obligations, simplifying the licensing process and "ensuring open stakeholder dialogue to build some trust with the companies", Lont concluded.
