The period between late 2021 to early 2022 was marked by two crucial developments that could potentially enable a quick and sharp reduction in Poland’s energy reliance on Russia. Aside from numerous gains for Poland itself, this outcome could prospectively be emulated by the other Central and Eastern European (CEE) countries, whose dependence on Russian energy sources constitutes a serious economic and security challenge.
First, on January 12, the Polish company PKN Orlen signed a large deal with Saudi Arabia’s oil major, Saudi Aramco. According to this arrangement, the Saudi side pledges to supply Poland with up to 337,000 barrels of crude oil per day that will be transported via tankers (Rcc.ru, January 13). Second, the Saudis will have the opportunity to purchase a 30 percent stake in Poland’s Gdańsk oil refinery (daily capacity of 210,000 barrels per day—second only to Płock) for $250 million. According to various sources, these deals will allow Saudi Arabia to become Poland’s key supplier of crude oil, crucially reducing Polish reliance on Russia (Oilcapital.ru, January 13). At the same time, however, Warsaw is seeking to discontinue imports of other types of non-renewable sources, such as natural gas and coal, which, if accomplished as planned, will drastically reduce Russia’s position in Poland’s overall energy architecture.
In terms of crude oil, the prospective Saudi expansion on the Polish market is likely to eat into the share of Russian suppliers, state-owned corporation Rosneft in particular. In 2019, Poland imported 97 percent of the oil it processed, with 61 percent coming from Russia. But that proportion has been dropping for years (Eia.gov, July 2020), and Rosneft’s slice of the Polish petroleum market, specifically, started to diminish already in 2015. Rosneft’s leadership at that time angrily accused the Saudis of using “dumping” tactics against Russia (RBC, October 15, 2015). Overall, based on preliminary calculations, Saudi Arabia might soon be able to supply Poland with 10 million–17 million tons (mt) of oil per year, covering a significant part of Poland’s domestic oil consumption, which in 2019 reached 31 mt. These volumes, however, will not begin to materialize until later this year. For now, Saudi Arabia and Russia remain partners as part of the OPEC+ deal to constrain production. But OPEC+ is set to expire in 2022, which will open up new prospects for the Saudi Kingdom in Poland.
Commenting on these developments, Russian experts indicated skepticism in Poland’s ability to wean itself off Russian oil supplies. As stated by one of the key experts of the international agency Argus, Vladislav Senkevych, Orlen might try to cut Urals (Russian oil) purchases transported by sea, but it is unlikely to diminish consumption via the Druzhba pipeline. While he admitted that the number of Russian oil players on the Polish market has dwindled, Russia is likely to remain Poland’s largest supplier for the foreseeable future (Oilexp.ru, January 13). Another expert, Igor Yushkov, a leading analyst at the Foundation of National Energy Security, also expressed confidence in Russia’s ability to preserve its leading role on the Polish petroleum market. He posited that Poland cannot really diversify away from Russian-produced oil, because the majority of Polish refineries are only compatible with the Urals brand—the modernization and/or alteration of operations required to switch to other types of oil would be exceedingly costly. He effectively accused Warsaw of waging a disinformation campaign on the subject: in his view, diversification is nothing but “[Poland] mixing various brands of oil with Urals… This allows Poland to avoid the modernization and restructuring of its oil refineries while, at the same time, rhetorically claiming that they are reducing the dependency on Russian oil supplies.” Yushkov declared that even if Poland does reduce the amount of crude procured from Russia, the latter will have no problem selling those volumes to other foreign consumers, particularly due to the high level of interest in the Asia-Pacific region (EADaily, January 13).
Yushkov’s assertions are worth qualifying, however. First—and this is grudgingly admitted by the majority of Russian oil experts—Poland has already succeeded in reducing its purchases of Russian oil over the past decade by several million tons (Eia.gov, July 2020), something that is likely to be a long-term trend. And second, while Polish oil refineries are indeed primarily compatible with the Urals brand, Arab Light (the Saudi brand) has many similarities with Urals in terms of the oil’s key characteristics, which might facilitate a smoother transition toward greater use of Saudi oil (Neftegaz.ru, Kommersant, January 13).
In addition to petroleum, Poland has also expressed a strong determination to shrink Russia’s share in other parts of its energy mix. Specifically, in terms of natural gas supplies, Warsaw is spearheading the construction of the 275-kilometer-long Baltic Pipe, which will connect Poland with Norway via the territorial waters of Denmark and Sweden. The pipeline, expected to become fully functional on October 1, 2022, will secure the delivery of up to ten billion cubic meters (bcm) of natural gas annually—on par with the amount Poland procures yearly from Russia. To Moscow’s surprise, Warsaw decided to pursue and complete the project irrespective of both its total cost (estimated $1.7 billion) and the continuing energy crisis in the wider European Union (Lenta.ru, December 28, 2021).
Moreover, Poland is discontinuing imports of Russian coal, based on a governmental decision made in 2020. Out of 18-19 millions of tons of coal imported by Poland in 2019, approximately 70 percent came from Russia (RIA Novosti, February 6, 2020). The Russian coal producers defiantly argue that their supplies heretofore earmarked for Poland can easily be redirected to Asia-Pacific markets—namely, South Korea, Japan, China and Taiwan (RIA Novosti, February 7, 2020). However, those would-be Eastern consumers all aim to reduce their use of the dirty and carbon-heavy coal in the coming decade (see EDM, July 27, 2020).
Despite Russia’s defiant or dismissive rhetoric, the prospect of becoming dramatically cut out of the Polish energy market could become a noteworthy challenge for Russian hydrocarbon producers. After all, in terms of oil alone, Poland has been annually buying 7 percent of all Russian exports (Kapital-rus.ru, January 13). At the same time, the Polish example—which will still need to be fully tested in practice—could become a model for other CEE countries looking to improve their national security prospects by eliminating their strategic dependence on Russian energy supplies.