SECURITY OF NATURAL GAS SUPPLY TO CONSUMERS IN UKRAINE AND POLAND IN THE FACE OF OPEN RUSSIAN MILITARY AGGRESSION IN 2022 (COMPARATIVE STUDY)

What is it about?

Security of natural gas supply to consumers in Ukraine and Poland in the face of open Russian military aggression in 2022 (comparative study). "Міжнародні відносини, суспільні комунікації та регіональні студії" 2023, 1 (15), pp. 235-253 Military operations, including Russian attacks on natural gas production sites controlled by Ukraine and network restrictions, have led to a 7 % year-on-year decline in natural gas production and the temporary loss of natural gas access for hundreds of thousands of Ukrainian consumers. In 2022, 18,5 bcm of natural gas is likely to have been produced. The autumn suc-cesses on the frontline allowed Ukraine to start clearing damage on reco-vered territories and increase the number of new drillings.The extensive damage to companies using natural gas in production that was caused by Russian attacks and the scale of emigration reduced natural gas consumption in Ukraine by a quarter. Nevertheless, imports were ne-cessary. It was most profitable for the government in Kyiv to bypass transit costs and buy part of the natural gas supplied from Russia via Ukraine to the EU.Due to the cost of transit, a smaller part of the gas acquired by Ukraine was from other countries (e.g. Norway). The amount of natural gas (owned and owned by foreign companies) in storage in Ukraine at the end of October was 14,2 bcm. In the end, from its western partners Ukraine probably im-ported a total of only 1,5 bcm. Likely, some of the natural gas owned by counterparties stored in Ukrainian storage facilities was purchased.As of 2021, the demand for Polish customers was lower than for Ukrainian needs. According to preliminary data, some 16,15 bcm of natural gas was sent to Polish consumers in 2022. Probably mainly due to the authorities’ protective moves towards households, natural gas transmission to domestic consumers in Poland fell by only less than 17,5 % compared to 2021. Indus-trial use of natural gas has decreased more.The Polish authorities have completed many investments (or made progress in this area) in natural gas infrastructure long postulated by experts. The degree of depletion of deposits and the high capital intensity of natural gas exploration and production requires a significant increase in investment in natural gas exploration and production to stop the further decline in natural gas production in both countries. Key words: energy security of Ukraine, energy security of Poland, natural gas, consequences of Russia's military aggression against Ukraine.

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Photo by KWON JUNHO on Unsplash

Photo by KWON JUNHO on Unsplash

Why is it important?

Contrary to Russia’s plans, the open war that began in February and itsconsequences have resulted in Ukraine and Poland becoming less dependent onnatural gas imports.With the current economic difficulties, it is a challenge for both countriesunder consideration to allocate sufficiently large resources for investment indomestic exploration. Assuming an imminent reduction in natural gas prices topre-pandemic levels, with the further development of the Polish industry and therecovery of the Ukrainian economy, business demand for this commodity willrise above 2019 levels.The satisfaction of the natural gas demand of both countries analysed in2023 through imports is not certain.The aggressor attacks on energy infrastructure carried out in late 2022 in-crease the likelihood that Russia may interrupt natural gas transit via Ukraineand attempt to paralyse its transmission and distribution network as well as itsproduction with a series of massive attacks on infrastructure [22].Their likelihood is, however, reduced by Russia's thus preventing itself forthe future (or at least very seriously postponing it) from economically beneficialnatural gas exports via Ukrainian territory. To this must be added the aggrava-tion of the aggressor’s relations with countries from Europe, America, and Asiastoring natural gas in underground storage facilities in Ukraine.Considering the deterioration of the EU’s relations with Russia as a per-manent consequence of the current military confrontation, the continuing hugeshare of LNG imports in securing supplies to Poland and (indirectly) to Ukraineis certain. Indeed, within the EU (including Poland), the level of natural gas im-ports is much higher than its use in the production of electricity and heat. Apartfrom the current price level, there is no indication that, except for the energysector (which is gradually switching to RES), there will be a permanent radicalreduction in natural gas consumption by industry in the coming years. Hence,experts rightly postulate, once the war is over, the construction of LNG termi-nals in Ukraine [1, p. 51; 4, p. 25].The EU was able to dramatically increase its LNG imports in 2022 thanksto significantly lower natural gas demand in the Far East, particularly China, and mild winter. It is uncertain whether similar circumstances will be repeated in2023.It is unlikely that the drought and the number of nuclear plant shutdowns inFrance will be repeated quickly in these dimensions.Despite problems with semiconductor supply and the financial difficultiesof natural gas buyers, the amount of electricity generated by RES and the use ofheat pumps will increase in Poland.As the setbacks in this regard in the EU in 2021 have shown, the amount ofenergy generated by weather-dependent sources is difficult to plan for [20, p. 9,10]. A very significant increase in the use of geothermal energy within the EU isunlikely due to geological and financial considerations.Despite the attractive price conditions offered by Ukraine, due to the far-reaching reorientation of supply routes, there is no indication that these storagefacilities will be used on a large scale for storage purposes by the EU in the nearfuture [4, p. 16].Due to the geographical distribution of storage facilities, the exception maybe the closest neighbours, especially Poland due to its modest storage capacitiescompared to Ukraine's other western neighbours.Given that Ukraine only has storage facilities in former natural gas and oilfields - as the filling level of the storage facilities decreases, the withdrawal ca-pacity of the stored commodity during prolonged periods of low temperatureswill become an increasingly serious problem.The above interpretations do not allow the rejection of estimates that Ukrainewill be forced to import around 5 bcm of natural gas in 2023. It is therefore notsurprising that its government maintains the ban on exporting its natural gasoutside Ukraine and plans to increase its production by 1 bcm in 2023.It is difficult to estimate how much effect the Polish authorities’0 plansto increase natural gas exploration, increase energy efficiency, reduce methaneemissions from the grid, support the development of biogas plants, acceleratethe implementation of RES, further electrify heating and encourage citizens tochange their energy market habits will have in 2023. Due to a lack of economicmaturity, hydrogen projects will only benefit in the years to come. Due to theseverity of Russian attacks and the scale of expenditure for war needs, it is muchmore difficult to implement similar projects within Ukraine (e.g. to increasenatural gas production).

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