Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Pipelines on Tap for Putin on Poland Trip

President Vladimir Putin embarks on his first official visit to a former Eastern bloc state this week, traveling to Poland, which escaped the Soviet orbit and is now a member of NATO.

Putin will address the parliament in Warsaw and visit a trade fair in the western city of Poznan, aiming to consolidate improvements to ties that were testy in the early post-Cold War days and settle long-running questions over gas pipelines.

"This [two-day] trip should be a symbol of closer economic cooperation and the role of Russian companies in Eastern Europe," said Alexander Pikayev of the Carnegie Endowment think tank in Moscow. "As Putin always has a pragmatic approach, he will stress economic ties."

Marek Siwiec, national security adviser to Polish President Alexander Kwasniewski, predicted a "new opening in relations."

Discussions will undoubtedly focus on a dispute over Russian proposals to build a spur pipeline taking Arctic gas south through Poland and skirting Ukraine, which Moscow accuses of siphoning supplies from the main east-west pipeline.

Poland's leftist government stands by earlier plans to build a second line from Russia to the West alongside the existing route, rather than the alternative spur. Poland also wants to reduce the amount of Russian gas it has contracted to buy.

Polish officials held talks on both issues in Moscow last week with hopes of clinching a deal before Putin's arrival. Sources close to the talks suggested that overall plans to boost trade depended greatly on a successful outcome.

Poland on Friday said it would boost the capacity of the Yamal-Europe gas pipeline by more than half to 28 billion cubic meters per year over the next two years to make its Russian gas imports more flexible.

But last week's talks did not end with a wider agreement on completion of the Yamal project and making Poland's bulky long-term agreement with Gazprom more adjustable, said Deputy Economics Minister Marek Kossowski.

"We have agreed to boost the capacity of the existing Yamal stretch and were given confirmation of Gazprom's intentions to complete the project as a whole," Kossowski said

"But we do not expect any final agreements to be signed during President Putin's visit, as there are many technical issues remaining to be solved," he added.

Poland's leftist government is seeking to renegotiate terms of a long-term gas supply deal with Russia signed in 1996 that it says was based on excessively high gas demand forecasts.

The Economics Ministry has recently cut its medium-term forecast for gas demand by as much as 20 percent to 14.9 to 19.8 bcm in 2010, and the 1996 deal, under which Poland will receive 12.5 bcm of gas annually after 2010, now appears far too large.

Poland now consumes around 11 bcm a year, with more than 60 percent of the demand imported, primarily from Russia.

The Yamal-Europe pipeline, whose first stretch is now capable of pumping 18 bcm annually of Russian gas across Poland to Western Europe, is a thorny issue between Moscow and Warsaw.

Poland wants Gazprom to complete the two-pipeline project, originally due to carry 64 bcm of gas per year, as most of its own imports were to be delivered via the nonexistent stretch.

But Poland's uncertainty over future gas needs and Gazprom's own alternative plans of transit routes have so far derailed completion of the project, ruffling feathers with Poland.

Kossowski said that talks about the timing and terms of the completion of the Yamal pipeline would continue.

Gazprom operates the first stretch of the Yamal-Europe together with Polish state-owned gas group PGNiG.