The is significant industry optimism concerning the potential for shale gas development in Poland (more here), with estimates sufficiently high to suggest that Poland could shift its supply base away from heavy dependence on Gazprom and Russia’s good will to domestically produced gas from shale. Granted exploration for shale gas in Poland is new and the resource may not turn out to be as good as expected. Poland is also seeking to build an LNG import terminal on the Baltic Sea coast. Nonetheless, and despite opposition from the European Union, Poland has recently entered into a another long term agreement that continues its dependence on Gazprom.
Craig Pirrong assesses the developments in an article at Seeking Alpha: “Poland: Marry Gazprom in haste, repent at leisure.” As Pirrong points out, the uncertainty surrounding shale gas resources in Poland is good reason to avoid making a long-term commitment now. Real options analysis, Pirrong said, suggests that “considerable uncertainty with an appreciable upside potential means that it is wise to avoid locking into long term commitments until that uncertainty is resolved.”
That the state-owned monopoly gas production and distribution company chose to lock into a long term commitment with Russia rather than explore its domestic resources more completely suggests to Pirrong that Polish officials have either been “suborned by Gazprom/Russia” or are just clueless. Either way, not good news for Polish industry or consumers.