Polish market in natural gas
The process of restructuring of Polish natural gas sector according to market rules has been started in 1998. Only then, State owned natural gas enterprise Polskie Górnictwo Naftowe i Gazownictwo (Polish Oil & Gas Company) was transformed into the entity in which the Treasury holds 100% of the initial capital. In the same year The President of Energy Regulatory Office started the process of licensing the enterprises acting within the sector of gas fuels. Due to those activities there were separated single types of activities in so called „gas chain”, which appeared to be the beginning of deeper works over the process of market transformation of the sector. Unfortunately, until the year 2005, market transformation was fictitious. In fact Polish Oil & Gas Company acting as State owned vertically organized enterprise did not allow the competition to develop by blocking the equal access to the infrastructure which effectively prevented other trade enterprises from development.
The independent distribution enterprises were developing using the capacities of the regions which were not covered by gas grid. However this development was and still is considerably limited due to the fact, that there is no possibility to change the supplier of natural gas which still is the monopolist.
In the year 2005 as a result of implementation in Polish law of the provisions of gas directive no. 2003/55/EU, Polish Oil & Gas Company was divided into two parts i.e. for extraction and turnover and for transmission by creating the entity PGNiG-Przesył within the structure of Polish Oil & Gas Company. In the half of the year PGNiG-Przesył was passed to the Treasury which resulted in effective sealing off Polish Oil & Gas Company from influencing the decisions concerning third party access. From now on the system operator can act equally and in a way not discriminating anyone. In the year 2006 PGNiG-Przesył changed its name into OGP Gaz-System and due to owners’ decisions concerning raising the capital and taking over from Polish Oil & Gas Company transmission infrastructure became an independent Operator of Transmission System in Poland.
Only those changes created a solid basis for actual development of independent, competitive enterprises on the market in natural gas in Poland.
In current structure of the gas market there are entities running the following types of activities:
- Search and extraction
In spite of the above mentioned changes the market in natural gas in Poland is still highly monopolised in all fields of activity. This is a result of absolute domination on the market of one capital group which is Polish Oil & Gas Company, which directly or through dependent companies runs all activities, except transmission, covering with its reach 98 per cent of the market.
Transmission activity is rendered by Transmission System Operator, State Treasury company OGP Gaz-System S.A., which acts in this role since July 2005, due to the decision of the President of Energy Regulatory Office. This entity’s independence is a guarantee of an access to the transmission systems for all enterprises involved in this trade, and according to the rules of the market. Extraction activity is realised mainly by one enterprise – PGNiG S.A, which controls the majority of domestic extraction. In this sector there are also functioning other entities like Petrobaltic, FX Energy, Aurelian, however their market share is very small. As far as storage is concerned the whole storage capacity is owned by PGNiG S.A. The company has not elaborate so far any standard contract or storage code and uses the whole storage capacity for it’s own purposes, except a part of a store in Mogilno, shared with OGP Gaz-System S.A.
The gas in distribution systems is distributed by 6 companies of capital group of PGNiG S.A., while turnover with natural gas was separated from their so far rendered activities and was included into basic activity of PGNiG S.A. Except for the group PGNiG there are active other distributors of natural gas which are creating own distribution systems. They are among others: HANDEN, GAZ ENERGIA, KRI, Media Odra Warta, Anco, however their market shares are very small.
At present moment the turnover with natural gas in Poland is monopolised by PGNiG S.A., which owns almost 98% of market shares. However, due to progressing processes of liberalisation of natural gas market and allowing business customers to choose the supplier there appeared first syndromes of development of independent companies of natural gas turnover, like for example HANDEN Sp. z o.o. This is the first independent company which, next to PGNiG, is presently importing natural gas through the transmission system and is selling it in on domestic market. Other companies not dependent on PGNiG are also selling gas to final consumers, however mainly to individual consumers.
Except for monopolised structure of Polish natural gas sector there exist other, equally important barriers for introduction of competition. The first is a limited access for customers to other sources of gas than the one belonging to PGNiG. It is worth mentioning here, that PGNiG is 99% distributor of natural gas from domestic sources as well as of imported gas. So far existing lack of other gas importers is the result of blocking off an access to storage capacities which are in exclusive disposal of PGNiG S.A. According to Energy Law, in order to start importing of natural gas to Poland it is obligatory to collect compulsory reserves of this fuel. Until market rules concerning access to storage capacities of PGNiG S.A. are implemented, the entities aiming at becoming gas importers will be forced to build own stores of gas, which requires enormous expenditures of time and capital as well as identification of proper geological structures which occur very rarely. The other serious obstacle is that the natural gas infrastructure is not alignment to market rules. It requires considerable expansion of transmission systems in sense of change of gas propagation and first of all installation of measurment system over the whole transmission system.
Source: Energy Regulatory Office, own elaboration