Proposed amendments to Poland's gas storage law are "very positive" but several issues remain, European Federation of Energy Traders' (EFET's) European gas markets manager Pawel Lont told Argus.
The law obliges gas-importing companies to maintain stocks covering 30 days of imports that can be delivered within 40 days to the Polish grid. Importers can keep inventories outside the country, but must also hold enough transport capacity to import all the gas within 40 days.
The European Commission said last month that it would refer Poland to the European Court of Justice for the storage law's restrictive requirements on cross-border gas trade. Lont told Argus in June that the laws need a "proper overhaul".
The Polish government planned to amend the gas storage law in summer, but it has yet to submit the law for adoption and reform is now likely to be postponed until the formation of a new government. The largest proposed change is that the storage obligation would be moved from importers to end-users and state strategic reserves agency Rars.
But while the amendments are "very positive", there remains several issues. Firstly, EFET "does not see much justification" for setting the size of the storage obligation so high — at 35pc of peak demand in a 1-in-20 years scenario, multiplied by a factor of 1-3 set annually by the government. Such a large storage obligation can "crowd out volumes for commercial use", Lont said. Now that mandatory filling levels are in place, this could become even more of a problem, he added. Stemming from this issue, the levy set to finance strategic stocks is capped at a "very high level that can be harmful/discouraging to gas consumers", he said.
And the storage products are offered for one year starting in April, while the storage obligation is for the gas year starting in October. This mismatch would pose just as much a problem for Rars as it did for importers beforehand, Lont said. "If anyone is to have any incentive to use them [storages], the products need to be adjusted to the customer needs," he added.
Other barriers to entry
Several other issues besides the storage obligation are holding back competition in the Polish gas market, Lont said.
Companies sometimes need several licences if they wish to trade across borders and domestically, which is a "very long and cumbersome process", Lont said. The list of documents required is specified in the Energy Act, making it "very inflexible and in many cases problematic", he said, noting that in some cases, such as the provision of certificates of no criminal record, the requirement can be placed at different levels in the corporate hierarchy and acquiring these documents is almost "an impossible task, given the short period of validity". In practice, "the licensing procedure can take several years", while licence renewals are no less cumbersome, he said.
Lont also pointed to Poland's shorter gas day, which runs from 09:00 to 15:30, meaning in practice companies have "less time to adjust and if anything happens on the other markets after the trading window closes, all one can do with the position in Poland is just stand and watch".
There is limited transparency and not much of a chance to discuss different measures before they take effect, Lont also noted. While national regulator URE and system operator Gaz-System typically offer sufficient time to consult and communicate everything in English, communications from the Polish ministries are "often last-minute, exclusively in Polish and with very little or no time to react", he said. "This is a major concern to any company wishing to enter the Polish market, as the regulatory risk is extremely high," he added.
One last issue Lont highlighted was the 2017 legal obligation to diversify gas imports so that no one source makes up more than 33pc of total supply, although this excludes imports through the LNG terminal at Swinoujscie and imports from EU/EFTA countries. This means that in practice the obligation now solely applies to the border with Ukraine, as the Yamal-Europe pipeline is no longer in use for import or transit of Russian gas. "In a broader perspective, the obligation defined this way can impede the potentially very useful co-operation with Poland's neighbour [Ukraine], also in terms of using the storage facilities," Lont said.
