“CRUDE OIL SUPPLIES FROM THE CASPIAN REGION CONSIDERED AS ONE OF THE CRUCIAL ELEMENTS ENSURING THE FUEL SECURITY OF POLAND’ - Piotr G. Wozniak, Minister of Economy of Poland

 

Caspian Energy (CE): Mr. Wozniak, what will be the role of oil delivery from the Caspian region in your energy security? Is the Caspian region seriously considered as a supplier of energy resources to Poland and further to Europe?

Piotr G. Wozniak, Minister of Economy of Poland: Crude oil supplies from the Caspian region are considered as one of the crucial elements ensuring the fuel security of Poland. The project of the transportation corridor for crude oil from the Caspian region up to the Baltic Sea is perceived not only as an additional source of supply to Polish market, but also to other European and international markets. At this early stage of the project, Polish refineries are expected to receive about 3 million tons of crude oil this way.

 

CE: How would you evaluate the result of visit to Azerbaijan in 2006? Did you manage to resolve any mutual ties-related issues and what are they?

Piotr G. Wozniak: It was my first encounter with Azerbaijan’s partners and an excellent opportunity to establish closer relations. I met the representatives of Azerbaijan authorities, including President Ilham Aliyev and Prime Minister Artur Rasizadeh. I also talked to the Minister of Development, Heydar Babayev and Minister of Industry & Energy, Natig Aliey.

Our discussion over potential areas for further development of economic cooperation concentrated on oil and gas and promotion, e.g. National Polish Exposition in Baku in November 2006. We also covered the Azerbaijan’s WTO accession process and ways of assisting it by Polish experts. Moreover, during the visit, we had a chance to prepare the session of the Polish-Azerbaijan’s Intergovernmental Commission of Economy Cooperation, which finally took place in Warsaw in August 2006.

CE: How would you evaluate the prospects of Azerbaijan-Polish cooperation in the non-oil sector? What shall be the issues of the highest importance?

Piotr G. Wozniak: I consider Azerbaijan as a prospective economic partner for Poland. The dynamic growth of gross domestic product, nearly 27% in 2005 and around 36% in 2006, reflects capability of this country and should prompt Polish exporters and investors to initiate more extensive relations with Azerbaijan’s partners. Lately, Polish-Azerbaijan’s trade turnover has been systematically growing. In 2005, 63.3 million USD turnover was reported while in 2006 it was 76 million USD (according to the preliminary data for 2006). Taking under consideration the potential of both national economies, I assume that the trade exchange will be still growing, and the decline of turnover in the first quarter of this year is only temporary since it is caused by the seasonal cycle of some deliveries such us nuts from Azerbaijan and cotton from Poland.

Among very prospective sectors, I would like to mention: construction materials, pharmaceuticals, food, cosmetics, and machines, especially for food processing industry. In my opinion, preservation and renovation of monuments in Baku might be a very interesting market for Polish companies.

We are going to continue promotional activities aimed at increasing the number of Polish products to Azerbaijan’s market. In November 2007, we are going to organize the second round of the Polish national exhibition in Baku and conduct the second session of the Polish–Azerbaijan’s Intergovernmental Commission of Economy Cooperation. One of the crucial issues concerning our cooperation is an experts’ support in the field of legal adjustment to the WTO requirements and establishing conditions for the activity of small and medium Enterprises, which Poland is going to render for the governmental administration of Azerbaijan this year.

CE: How are the results of the Krakow summit being implemented?

Piotr G. Wozniak: The Intergovernmental Working Group on energy issues was established following the Krakow meeting of the Presidents of Azerbaijan, Georgia, Lithuania, Poland and Ukraine and the representative of President of Kazakhstan. Its objective is setting up a company to make a business plan of the Odesssa-Brody-Plotsk-Gdansk pipeline project.

First meeting of the Group was held in Gdansk on June 5, 2007. It was concluded that the new company will be set on the basis of existing Sarmatia Ltd. by including new shareholders. By June 15, 2007, Przyjazn PERN will have prepared an enlargement mechanism and forward it to all the parties. Before the end of June 2007, the representatives of state energy companies will meet in Warsaw to assess the mechanism and, in case of its approval, to enlarge the company. The next meeting on the ministerial level will be held in Tbilisi (Georgia) in September 2007 and before that, the enlarged Sarmatia company will prepare the feasibility study regarding crude oil transport from the Caspian Sea Region up to Gdansk (North Poland) – the Euro-Asian Crude Oil Transporting Route.

 

CE: How would you estimate the possibilities of natural gas delivery’s diversification? Does Poland have any long term gas supply contracts?

Piotr G. Wozniak: Polish government defines the diversification of energy carriers as obtaining access to foreign source via new independent infrastructure.

LNG is supposed to cover 1/3 of total domestic gas demand. The remaining part of Polish demand is expected to be met by domestic and eastern sources. This portfolio is a governmental policy since January 3, 2006. The Resolution on activities aiming at energy carriers’ diversification founded legal activities regarding the preparation of investment process and commercial decisions enabling network of gas supplies from new sources, construction of LNG terminal and the increase of domestic gas production.

On June 20, PGNiG (Polish Oil and Gas Company) signed an agreement with SKANLED Consortium on the construction of link between Poland and Norwegian gas fields in the North Sea. Final decision about the investment will be made in 2009. The first step would be building a gas pipeline from Norway to Denmark. Next step would be the Baltic Pipe from Denmark to Poland. This agreement was preceded by purchasing of 15% of shares in Skarv and Snadd Norwegian gas fields by PGNiG.

The diversification of gas supply sources also refers to construction of an LNG import terminal in Swinoujscie (North Poland). LNG may be delivered from the Middle East and Africa as well as from Norway. The planning and introductory works have been commenced such as preparation of the investment process, negotiations of contracts for LNG supplies, and obtaining necessary permits. The investment stage of the project is foreseen to be carried out in 2008-2010. The accomplishment of the construction is planned for 2011. We expect that initial annual capacity of the terminal will reach 2.5 billion m3. In case of gas demand increase, the module construction of the terminal will allow its capacity extension up to 5-7 billion m3.

Thank you for the interview.