International Conference on Economics, Finance & Business, Venice

CHALLENGES AND OPPORTUNITIES BROUGHT ABOUT BY THE END OF GAS TRANSIT VIA UKRAINE

PAWEL LONT

Abstract:

1st January 2025 was a historical day for Europe’s gas market, since on that day transit of Russian gas via Ukraine, Europe’s most important supply route for the past decades, came to an end. Even though most countries in the region have made the necessary preparations, the end of gas deliveries through Ukraine brought about new challenges to the countries in the region forcing them more than ever to cooperate in ensuring a steady and affordable flow of gas. The situation creates an opportunity particularly for Poland as a country that has more than a decade of experience with phasing out Russian gas. Holding a well-developed and expanding gas transmission network towards virtually every direction, Poland holds the capability to facilitate imports of gas of non-Russian origin to the entire region, reinforcing it supply security and putting an end to its reliance on Russia once and for all. Circumstances are also favourable – alternative routes from the west have lost their competitive edge in the recent years. Despite the remarkably favourable conditions, Poland is facing a number of challenges that need to be tackled before it can experience better utilization of its networks and higher liquidity on its gas market. The country’s gas hub remains heavily underdeveloped when considering its potential, particularly due to its restrictive policy when it comes to market access – Poland stands out as a country maintaining very strong barriers to trade gas, which effectively block the ability to import natural gas into the country by commercial actors (see European Commission’s decision IP/23/5687 referring Poland to the Court of Justice). These restrictions stem from the design of storage filling obligations placed on importers and lead to a situation where the national company, Orlen, enjoys a near-monopoly status in the country. The aim of this study is to identify and evaluate barriers, which may prevent the Polish gas market from becoming an attractive import route in the future and establish a plan on how these challenges should be addressed. Literature review on the subject of incentivising cost-efficiency of transmission system operators will be performed, alongside a detailed analysis of the experiences of other countries, which were successful in establishing liquid markets for gas. On this basis, a case study for redesigning Poland's Gas Release Programme will be considered to identify the key steps needed to establish an attractive gas market.

Keywords: natural monopoly natural gas transmission system operator competitiveness efficiency