Poland - Energy
Poland's energy policy has evolved considerably over recent years to support the country's transition to a market economy. Energy legislation implemented in 1997 introduced third-party access to the energy transmission and distribution network, provided for gradual liberalization of energy prices and established a central regulatory agency to oversee the energy industry. Reforms in the energy sector have focused on increasing competitiveness. Privatization of energy companies is currently in progress.
In 2008, 154.361 terawatt hours, or TWh, of electricity were generated in Poland, which exceeded domestic consumption requirements of 153.383 TWh. Electricity consumption decreased by almost three percent compared to 2007. Poland's electricity sector is divided into four sub-sectors: generation, trading, high voltage transmission and distribution.
The State-owned Polish power grid company, PSE-Operator S.A., operates the electricity grid and is responsible for the high voltage transmission network (220 and 400 kV) and ensuring that the supply of electricity meets demand. The Polish grid is operating synchronously with the Western European grid (UCTE - Union for the Coordination of Transmission of Electricity).
Poland generates a significant portion of its electricity from lignite, or brown, coal. In 2007, brown coal-fired power stations generated 51.3 TWh of electricity, which represented 32.1 percent of total electricity generation in Poland. Emissions from brown coal-fired plants are generally much higher than those from comparable black coal-fired plants and this may cause future compliance issues with EU environmental restrictions.
Poland has begun planning for the construction of its first two nuclear power plants, with completion of the first plant targeted for 2020, in order to comply with requirements restricting greenhouse gas emissions. Poland's Commissioner for Nuclear Power plans to release a detailed schedule for the completion of the nuclear power plants in 2010, following public consultations and government approval.
Oil and Gas
Poland's oil reserves are insignificant. Poland currently has six oil refineries which in 2008 processed approximately 20.8 million tons of crude oil. Most refineries require modernization in order to enable them to raise the quality of their products and to meet increasingly stringent environmental standards but two leading refineries, Gdansk Refinery owned by Grupa Lotos S.A. and Plock Refinery owned by PKN ORLEN S.A., have been fully modernized and are capable of producing fuels which meet current EU standards. Their combined current processing capacity is 24 million tons of crude oil per year. The State Treasury owns 27.5 percent of PKN ORLEN S.A. (10.2 percent directly and 17.3 percent through Nafta Polska S.A.) and 58.8 percent of Grupa Lotos S.A. (6.9 percent directly and 51.9 percent through Nafta Polska S.A.). The State Treasury owns 100.0 percent of Nafta Polska S.A.
Russia is the main source of Poland's oil imports, accounting for 92.6 percent of oil imports in 2008. The existing oil infrastructure (pipelines and a sea terminal) is capable of handling full import demand from other overseas sources. Polish oil companies are currently developing a new transportation corridor for crude oil from the Caspian Sea region, with the goal of strengthening the security of oil supplies to Central and Eastern European Countries, including Poland, and increasing the efficiency of exporting oil from the Caspian Region.
During January 2007, oil supplies from the Druzhba pipeline were disrupted for five days following a transit dispute between Russia and Belarus. This disruption affected several European countries, including Poland, Germany, Ukraine, the Slovak Republic, Hungary and the Czech Republic. There was no immediate impact on any of the refineries in these countries, as they maintain reserves, and therefore supplies to end-users in Poland were not disrupted. A more prolonged disruption in the future may require refineries to seek alternative supplies, which may in turn cause disruptions to end-users in Poland. Since joining the International Energy Agency, or the IEA, in September 2008, Poland has establish emergency oil reserves which cover 90 days of net imports, in accordance with IEA requirements. These emergency reserves help to minimize the potential risk of crude oil and oil products disruptions in the Polish market.
Poland has extractable natural gas resources of approximately 93.0 billion cubic meters. Total domestic consumption was approximately 14.0 billion cubic meters in 2008. Approximately 28.7 percent of natural gas consumed in Poland in 2008 was obtained from domestic production, with imports and supplies from domestic gas storage facilities providing the remainder. Gas is imported primarily from Russia and Turkmenistan (65.5 percent of total domestic consumption in 2008). These supplies were supplemented by imports from Germany, Ukraine and the Czech Republic (5.8 percent of total domestic consumption in 2008).
In January 2009, a dispute between Russia and Ukraine caused a disruption to Poland's natural gas supplies. As a result, Poland received only 76 percent of its expected total natural gas imports and the shortage was balanced by supplies from Polish reserves. An additional contract was entered into in June 2009 with OOO Gazprom Export which will provide additional natural gas imports for purposes of replenishing Polish natural gas reserves. There are currently plans to increase the storage capacity for natural gas reserves for purposes of minimizing the effects of potential future disruptions. Poland and Russia are currently in negotiations with respect to the terms of their current agreement (which expires in 2022) regarding natural gas supplies, to allow for additional supply contracts.
The gas sector is dominated by Polskie Gornictwo Naftowe i Gazownictwo S.A. (Polish Oil and Gas Company, or POGC), which is listed on the Warsaw Stock Exchange. The State Treasury owns 84.8 percent of POGC's shares. POGC engages in the exploration for oil and gas, the production of oil and gas, gas storage, gas import/export and domestic gas trade. In 2007, six companies within the POGC group were established to act as distribution system operators.
Pursuant to a restructuring program and in accordance with provisions of Directive 2003/55/EC concerning common rules for the internal market in natural gas, OGP GAZ-SYSTEM S.A. was established in 2005 to act as a gas transmission system operator. OGP GAZ-SYSTEM S.A. is wholly-owned by the State Treasury.
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