Poland gas deal ensures supply, but draws critics

Gdansk, Poland-Poland has signed a 25-year contract with Russia's Gazprom for the supply of gas. According to the newspaper Rzeczpospolita, Poland will receive about 14 billion cubic meters of gas by 2010 from the Yamal pipeline, which will pump gas from the Siberian peninsula to Western Europe.

While guaranteeing supplies to a country rapidly modernizing its industry, and which is becoming almost entirely dependent on gas for its energy, the deal has come in for strong criticism from those who feel that such an agreement would once again make Poland dependent on Russian resources. Although Poland has said several times that it is seeking to diversify its gas imports and plans to renew talks with Norwegian firms, there are no signs that such talks are imminent.

Meanwhile, the country's antiquated oil refineries are going through troubled times. Net profit for Gdansk refinery, Poland's second largest, fell 46% from January to August 1996, compared with the same period in 1995. Gross profit was down by the same amount, while the refinery's costs grew by 21%. Local analysts blamed the problem on soaring world oil prices and the government's policy of keeping domestic prices static.

The refinery recently negotiated a financing arrangement with Merrill Lynch, which is organizing a fully guaranteed $100 million five-year loan towards a $400 million modernization program to be completed in 1999. A further $100 million is to be raised through the stateowned commercial Bank Handlowy SA, Bank Pekao SA, PKO BE and the private Bank Gdanski. The remaining funds will come from threeyear commercial papers. -Cris Whetton

Copyright Instrument Society of America Jan 1997
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