Will an Election or Pandemic Derail Poland-U.S. Energy Cooperation? Nope. [GGP]
The countries have been pursuing a common front against Russia’s dominance over Central and Eastern Europe, particularly natural gas supplies. This includes reciprocal visits by both country leaders and their energy ministers and signing memoranda on collaboration on the matter. In addition to governmental declarations, Poland’s state-owned oil and gas company has signed numerous contracts with U.S. LNG producers to bring in U.S. gas after 2022 as a replacement for Russian gas—when Poland’s long-term natural gas agreement with Russia expires.
Recent parliamentary elections became a springboard to significant changes in Poland’s energy administration and energy industry. But they will not change much in the nascent cooperation. By the same token, the upcoming presidential elections or even the highly disruptive Coronavirus pandemic are unlikely to have major implications here.
Parliamentary Elections, Energy Policy, and Energy Industry in Poland
Because much of the energy industry in Poland is either owned by the state or closely tied to the government administration, elections often mean not only personal changes in the energy administration but also among energy industry executives. As such, major adjustments happen usually during changes in administrations. Smaller modifications are usually expected when the incumbent wins elections.
Thus, to a casual observer the significant changes in energy administration and industry that followed 2019 parliamentary elections in Poland could seem unsettling.
On one hand, the incumbent party, Law and Justice (PiS) kept the majority of seats (235 out of 460) in Sejm, the lower parliamentary chamber responsible for prime ministerial nomination and, as such, for the majority of policy making. The party also kept Mateusz Morawiecki as prime minister.
On the other hand, we saw a complete dismantling of the Ministry of Energy and rearranging (and scattering) of energy policy related responsibilities. The new Ministry of State Assets replaced the Ministry of Energy in the supervision of companies in this sector. The newly created Ministry of Climate took over regulatory duties with respect to energy matters. Ministry of Growth will take the responsibility for general economic policy and by doing so will have an impact on energy and climate policy in Poland. Also, there have been extensive changes among top executives in the main state-owned energy companies including: state oil and gas company PGNiG, LNG company Polskie LNG, and Poland’s largest power company Polish Energy Group (PGE).
But one thing needs to be underscored: since the end of communism, Poland has been one of the strongest allies and supporters of the United States. Energy policy has not been an exception here. In fact, collaboration with the U.S. in energy matters has been often seen as a counterweight to many forces, most predominantly to dependency on Russia but also when it comes to disagreements within the EU.
As such, it is hard to imagine changes, any changes, in government or company structure that could effectively challenge Poland’s affinity toward the U.S. — even if the governing party changed. The changes that we have seen in Poland’s energy administration and industry thus reflect domestic political climate and internal divisions within the governing party.
All in all, the changes we see in Poland’s energy administration and energy industry reflect a new approach toward Poland’s relations with the EU. They are an expression of diplomacy rather than changes in Poland’s energy policy. The latter, including Poland’s demand for U.S. LNG and Poland’s cooperation with the U.S. energy administration will remain unchanged. This is a result of a combination of a long-standing commitment of the Polish state to support the U.S. in the region and a long-term energy policy set up by the outgoing energy administration and energy company executives. Importantly, the policy path is entrenched in: 1) long-term infrastructure projects that are either already functioning or in the process of late planning and construction and 2) long term contracts with U.S. LNG producers.
This is why, one should not expect significant changes in the event current President Andrzej Duda of PiS is not reelected in the 2020 elections and if in such a case early parliamentary elections are called.
And while Coronavirus could possibly cause presidential election delays as well as economic hardship, there is not much it can do to Poland’s energy policy path that, at least with respect to natural gas and U.S.-Poland cooperation, extends far into the 2040s. The possible weakening of a multilateral/EU policy in favor of a more national one could lead to even greater bilateral collaboration between Poland and the U.S.