Orlen sold gas storage facilities to GSP. What does this mean for the gas market?

Luc Williams

UOKiK’s consent to Orlen’s takeover of PGNiG

Gas Storage Poland for sale (GSP) is the fulfillment of a condition President of the Office of Competition and Consumer Protection for the takeover of PGNiG by Orlen. In March 2022, the President of the Office of Competition and Consumer Protection conditioned the consent to the takeover of PGNiG by relinquishing “permanently and irreversibly” control over GSP, which is part of the PGNiG Capital Group.

On Friday – as Orlen and Gaz-System announced – the final document closing the GSP sale transaction was signed. In February this year Orlen shareholders agreed to sell GSP. Closing the transaction was possible thanks to the consent of the President of the Office of Competition and Consumer Protection. To enable GSP to carry out its tasks, Orlen concluded an agreement under which the operator manages the capacity of the company’s underground gas storage facilities.

Expansion of gas storage facilities

Orlen owns seven underground gas storage facilities (UGS), with a total capacity of approximately 3.3 billion cubic meters. Five of them: Wierzchowice, Strachocina, Husów, Swarzów and Brzeźnica are deposit storage facilities using depleted natural gas deposits. Two, in Kosakowo and Mogilno, are cavern storage facilities in which gas is stored in empty spaces created in salt deposits as a result of salt flushing. As Orlen recalled, the company is currently expanding its largest warehouse, Wierzchowice, by 800 million cubic meters, to 2.1 billion cubic meters. The work is scheduled to be completed at the turn of 2025 and 2026. As a result, the gas storage capacity in Poland will increase to 4.1 billion cubic meters, which – as Orlen emphasized – will significantly strengthen the security of gas supplies to Polish customers.

Strengthening state supervision over gas infrastructure

The takeover of GSP by Gaz-System will strengthen state supervision over strategic gas infrastructurethanks to this, the model of functioning of the gas market in Poland will be organized while maintaining principles of separation of ownership (unbundling), which will provide market participants with a guarantee of transparency and competitiveness of operations – said Maciej Bando, the government plenipotentiary for strategic energy infrastructure.

According to him, this will also translate into improved energy security of the country. “Controlling the process of maintaining gas reserves in storage is one of the key elements of ensuring the continuity of its supply for the needs of the economy and individual customers. In addition, Gaz-System as the owner of Gas Storage Poland will gain the ability to initiate the expansion of storage capacity depending on the needs of consumers,” emphasized Bando, quoted in the Gaz-System press release.

Optimization and flexibility in managing the transmission system

In the opinion of the President of Gaz-System, Sławomir Hinc, the acquisition of GSP is an optimal solution both in terms of the flexibility of the national transmission system and the effectiveness of spending funds on the development of storage capacity.

“As a result of this process, the integrity of the system will increase through the free management of storage capacities in order to meet the needs of market participants and handle potential crisis situations. The operation of both companies in one capital group will also improve cooperation between the transmission system operator and the storage system operator, which will translate into increased security of gas supplies to customers,” Hinc assessed.

100% owned to the State Treasury operator of the Gaz-System gas transmission system is responsible for the transmission of natural gas, manages the most important gas pipelines in Poland and is the owner and operator of the LNG terminal in Świnoujście. (PAP)

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