Future of Poland is now in Texas’ hands

Poland and the Houston region are going to have a beautiful friendship.

I do not mean a friendship that is simply an extension of that between Poland and the United States. The closeness of our two countries is a given. Poland is 1 in 6 NATO countries (with also the United Kingdom, Romania, Greece, Estonia and the United States) that spends the agreed upon 2 percent or more of gross domestic product on defense. From the time of the American Revolution through the worst periods of the 20th century to the present, the Polish admiration for America as a beacon of freedom has remained solid. Over and over during nearly 250 years, America has demonstrated that Poland’s unofficial national slogan — “for our freedom and yours” — could be your own. We are free from foreign occupation today because of that.

But the budding friendship between Poland and the northeastern coast of Texas is something special and unique — and is being built upon this region’s crucial role in providing the world with energy, in particular liquefied natural gas.

On the surface this friendship looks like nothing more than a deal. In the last week of June, during the World Gas Conference in Washington, D.C, the Polish Oil & Gas Company (PGNiG) and Port Arthur LNG announced a 20-year agreement. PGNiG will buy two million tons of Port Arthur’s LNG a year for the next two decades.

The $8-$9 billion Port Arthur liquefaction facility is one of three major LNG export terminals that its owner, San Diegobased Sempra Energy, is developing in North America. The agreement is a major step forward for the project, committing nearly 20 percent of planned capacity for the two decades following its 2023 opening. Bechtel will build it.

But this deal is more than a deal. The gas will be shipped to Poland’s Swinoujscie LNG gas-port, the only European Union receiving terminal on the Baltic Coast. The agreement comes at a time of declining European natural gas production, making the continent more dependent on an unreliable and unscrupulous supplier, Russia. But it is also an opportunity for LNG exports to the EU from the United States.

Currently, Russia’s main gas pipeline to Europe (called Nord Stream) passes through Ukraine and Poland. Now Russia’s Gazprom is preparing to build a second line, Nord Stream 2, which will bypass East-Central Europe and run under the Baltic directly from its gas fields to Germany, doubling Gazprom’s shipping capacity.

The United States has opposed the project, arguing that it could jeopardize Europe’s energy security by increasing dependence on Russia. These concerns are not just speculative. Russian gas already accounts for 35 percent of Europe’s gas imports, and energy has long been used by Moscow as a political instrument.

In 2005, following the pro-Western Orange Revolution, Russia tripled Ukraine’s gas price. Later, Russia claimed that 7.8 billion cubic metres of gas in Ukrainian storage tanks were missing and reduced pressure in the pipelines bound for Ukraine.

In late March and early April 2014, following Russia’s invasion of Crimea and the outbreak of a Russian-sponsored separatist insurgency in the Donbass, Gazprom almost doubled the price of Ukraine’s natural gas. Russia cited money Ukraine owed to Gazprom as the reason; however, Gazprom had tolerated Ukraine’s debts for years, especially when pro-Russian elements governed the country.

In March 2018, Russia cut off the gas supply to Ukraine amid abnormal frosts, having lowered pressure in the pipe just minutes before it was supposed to start supplying gas to Ukraine according to the ruling of the Stockholm arbitration court. In response to Russia’s tactics, Ukraine has reduced its natural gas consumption and signed deals to get fuel from Poland and other European countries.

In delivering natural gas directly from Russia to Germany, Nord Stream 2 would bypass Poland and Ukraine, eliminating their pipeline-related leverage on Russia and allowing Russia to shut their gas without impacting Germany and the rest of Western Europe. In other words, the project would leave Central and Eastern Europe isolated and vulnerable to Russia’s economic and political pressure, undermining European Union and NATO cohesion, key goals of Russian President Vladimir Putin.

The result of Russian hardball political use of a key resource has been a rush for alternatives. Though LNG accounted for just 10 percent of Europe’s gas supply last year, many see it climbing to 25 percent by 2020. That means Poland could soon become the safe energy hub of Europe. Already Ukraine is scrambling to shift its sourcing away from Russia to us. Every country that is considering longterm supply deals involving Nord Stream 2 must worry about becoming Russia’s next geopolitical pawn.

With the recent Port Arthur LNG deal, the Houston region has become Poland’s partner in developing a new energy security for all of Europe while growing American exports and jobs — a beautiful friendship indeed.