Polish shale gas

"to Dutch disease, a term coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands following the discovery of a large gas field in 1959."
Dear Economist, the term Dutch disease was known before 1977. You can find it even in 1973 edition of Big Soviet Enciclopedy 3rd edition, volume 17, in the article dedicated to the Netherlands. There it's called the so called 'Dutch disease'. Either you coined this term before, or it was invented by someone else.

Sincerely,
Andrii Berdnikov,
Ames, Iowa.

Poland is one of the leading economic nations in Europe.
In the short run Poland will overtake leadership in Europe.
Poland is already now on the level of Norway ang getting stronger as Germany ever was.
There is for me no doubt that Poland will overtake leadership in Europe very soon.

It was about 1993 when the thought struck me that though the transition to capitalism in Poland was assured Polish capitalism could well be more Italian than Anglo-Saxon. So it has, very largely, proved to be - petty, unreformed bureaucracy; suspicion, at the least, of corruption at many levels; inability to implement major programmes that all agree are needed; jobs for the boys; even, of late, parcelling out of TV channels between parties.

Observations in this discussion about the continuing effects of Russian rule and the still visible contrasts between the Prussian partition and the east are well made - the congruence between the regions(other than the big cities and national minority-dominated areas) won by Kaczyński in the recent presidential elections and the Russian and Austrian partitions is striking.

I agree, as usual, with almost everything that mikeinwarsaw says. As fellow-thinkers we should at least meet for a drink (if we haven't unwittingly done so already). How though can we identify ourselves to each other on these pages without inviting the delivery of even more spam to our overloaded Inboxes?

Dearest Didomyk

I reiterate: "Poland, Uzbekistan and Turkmenistan were parts of the Soviet SYSTEM until 1989 with state-governance methods (hence resulting traditions after a few generations of bureaucrats) installed by the Soviets." It is a mere fact.

It is bizzarre that on that basis you seem to imply that this is all I "actually know about Poland on the one hand, as well as, on the other hand, about Uzbekistan's and Turkmenistan's historical reliance on Russia well before the Bolshevik revolution". I assure you, your suggestion is wrong. I know more than that.

You read way too much into my statement of fact, and then on that basis trying to dismiss that fact. It is a rather crude, silly and obvious discussion tactics. (I guess you can find in Schopenhauer's works.)

PS.Having said all that, a big part of Poland (including its capital Warsaw) were part of the Russian empire before Bolsheviks for a rather long while. (So you did not do your history lesson on that either.)

Placing Poland in the same group as the -stans of central Asia is clearly ridiculous. The only thing these countries have in common is the fact that they were all parts of the former Soviet (and previously Russian) Empire. Even then, however, Poland was a part of the outer Empire and, as such, had all the trappings of an independent state. The -stans did not. Otherwise, these are very different countries and very different societies.

The main point of this piece is, however, very different. It raises the issue of what happens when a natural resource bounty reaches a state with a non-representative government and a corrupt and dysfunctional bureacracy. Since the world is littered with such states, it is not surprising that this is by far the most common case, and not that of a well-run state such as Norway.

Is Poland more like a member of the former (more numerous) class or the latter?

Most Poles tend to be quite critical of the way their country is run. This has roots in the fact that the country has not been a level playing field in the past 20 years but a far more powerful influence is, I think, a pervasive and neurotic feeling of insecurity of a people who over the past 300 years have seen their attempts to run their country in their own way end in failure. In this context, the prior warnings of the doom-and-gloom crowd and the mystical ravings of the people who celebrate national disasters seem like clear-sighted visions. Obviously, they contend, this is yet another opportunity that Poland is going to blow.

The past 20 years indicate otherwise. There is in fact a good illustration of what may happen - the way that Poland used, and is using, EU funds. These funds could also have been put to poor use, and there are well-known examples of these being diverted by corrupt bureaucrats or vote-seeking politicians elsewhere in Europe. In Poland, EU funds have started to reach the country well before the accession and so far no major cases of this kind seem to have emerged. The Polish bureacracy and state companies are certainly at times more like relics of another age and far from their Scandinavian peers, but for all their shortcomings these funds are certainly changing the country. For, underpinning this is the fact that, although they may at times sound like romantics, the Poles are a practical people and appreciate the fact that, after 300 years in the wilderness, Poland has finally been given a break.

Wow, this so utterly rediculous. Plonad and Uzbekistan the same mentality? This guy is out of touch with the reality. The economist should not allow publishing piecies of some amateur writers.

The government system of central Europe and Soviet Union was absolutely different, even though they were all in the Warsaw Pact.
Not to mention, the culture and mentality... nonsense

The GeoForschungsZentrum, a German research center for geosciences in Potsdam, has estimated that some 510 trillion cu. ft. of shale gas ( 5% of world’s supply) could be found in Europe.

According to their estimates, prime targets for shale gas exploration include Poland, Germany, Hungary, Romania and Turkey. Most, if not all of these countries have received overtures from U.S. energy companies.

Now it's all at the exploration phase but over the next three to five years the true economic potential will become known. Extracting shale gas is more complicated than drilling for traditional gas deposits as well as more expensive because more wells need to be drilled to obtain the same amount of gas.

R_kraus wrote: "Poland, Uzbekistan and Turkmenistan were parts of the Soviet SYSTEM until 1989 with state-governance methods (hence resulting traditions after a few generations of bureaucrats) installed by the Soviets."

Thanks for your misguided lesson in history. If this is all YOU actually know about Poland on the one hand, as well as, on the other hand, about Uzbekistan's and Turkmenistan's historical reliance on Russia well before the Bolshevik revolution, - obviously you have nothing to brag about. Without revealing my background I will just let you continue enjoying your misguided ego-centric dreams.

@The North Pole:
"Unfortunately this is not what average Pole does."

I think many Poles take interests in politics, but they only see what popular media shows, and popular media are controlled by people that have power.

So we see in TV the whole "cross case", when we should be talking about where to cut budget, which law is unnecessary or bad, which administrative decision was stupid, etc.

For example - recently Germany and Poland wanted to start fast train between Berlin and Poznań ( http://traveladvisor.pl/2010/08/nie-dla-taniego-pociagu/ - Polish only ). One Polish resort wanted it, but the second said NO without real reaons.

As a sports fan I am always hearing this or that player is the next Gretzky or Pele. The same is true in business and politics; we seem to be unable to control ourselves and need to look at the new in comparison to the old.
This article wants to compare Poland to Norway and Turkmenistan. Neither of these comparisons are a fair analysis of what is going on in Poland, and in addition to Norway, there are many countries that have done well with resources; Canada, USA, Australia, more recently Ghana, and the Middle Eastern States. I am not saying any of these countries are perfect but when analyzing Poland analyze it for what it is not what it isn't and not how it compares to places that are vastly different.

If this is the same shale gas that is trapped in Colorado (U.S.) it's extraction could prove difficult. No one in the U.S. has yet succeeded in producing it economically. That is - so far as I know.

@wtf is pen name
"So what should we do?

Vote people we know are honest, not parties that promises the most for our particular group of interests."

Surely that, and citizens should take interest and put pressure on politicians even outside elections. Unfortunately this is not what average Pole does.

@mikeinwarsaw
I think we agree about the state of public administration, that it is visible in about all branches of life and that this administration is a major obstacle if Poland is to develop shale gas or anytrhing else related to energy.

Polish press asks worrying questions. Why it took 20 years and several so-called gas wars which rocked half of Europe to discuss it publicly? This is more historical.

Who controls the prospecting firms, and is there a deadline to get yes-or-no answer about presence of reserves and their exploitation? Polish public heard nothing, despite it is so important. Arguably, uncertainity benefits most Gazprom and Russia.

Then, how reserves might help Polish and pan-European energy diversification? Surely having an alternative during future midwinter gas cuts is in deepest interests of Poland and EU.

Then there is more economical question, which company gets what piece of the cake and what piece is awarded to Poland and what transferred abroad by multinationals. Here Polish administration has a dismal record.

The matter is extremely important for Poland and also EU. I would also argue that best for long term European interests is that shale gas in Poland is developed with best business practices and not in 'whose company grabs most for least bribes' mood of semi-criminal liberalization in Poland during 1990's.

I've heard that some newspapers are publishing stupid articles in August both because of the high temperatures and because the proper journalists are on leave but copmaring Poland to Turkmenistan and Lybia (a state long controlled by the whims of a madman) rather than to Sweden is shall we say male cow's excreta (so I don't receive yet another email from the moderator)

Turkmenistan, on the other hand, which the article foolishly gives as a comparison is a country isolated by Russia with nowhere else to go and as long as Russia maintains its dominance there (and in all of Central Asia) it will remain a dictatorship. It has no economic options because any infrastructure to link it with Azerbaidjan and Europe should pass through the Caspian Sea (which is Russian controlled) or, worse - through Iran, and any infrastructure that is to link it with China has to pass through Kazachstan (also Russian controlled) or Uzbekistan (an enemy) and from there Kyrgyzstan (rugged and also Russian controlled). Isolated, weak, with no economic options and outside USA's reach and protection. Does that sound like Poland? I don't think so

Poland is strategically situated on the North European Plain and a vital link between Western Europe and Russia. Germany owes its economic prowess to a great extent precisely because it controls a similar portion of the same plain - it is at a crossroads through which transportation and trade flow. Poland is also an EU country and a democratic state - maybe there is some influence lingering from the Cold War days but this is diminishing with time and is bound to die out sooner rather than later. The country is looking at improving productivity and rule of law, not going back to the old soviet days

@north pole

Mapping the economic geology of a country is one thing. Making a viable commercial exploitation is another. Present gas deposits (shallow sandstones geologically related to similar deposits in the North Sea Basin) in Poland are being exploited (by PGNiG, the State monopoly) as they supply about 33% of gas consumed in Poland. However, deep shale gas deposits are still completely unproven. Which is why 62 exploration licences have so far been issued. The technology to exploit such deep deposits has only become available over the past decade and only in North America.

At the end of the day there is an economic viability issue: are you prepared to pay extra for home country expensively extracted shale gas or would you rather it remained in the ground as a strategic reserve for the long term and in the meantime used much cheaper imported gas from whichever foreign source, be it Russia or the North Sea or Qatar or elswhere? I know what my choise would be........

Regarding the surealistically disfunctional Polish administration (at all levels from local municipal to national government levels), fortunately EU standards are slowly being imposed top down. Its remarkable how much positive change has taken place since 2004. Though there is still far too much "jobs for the boys" but that happens in all countries including the USA and leading western democracies. Its noticeable that where EU monies are involved and there is a detailed on-going audit from Brussels that monies are not being syphoned off into politicians' pockets (which has happened in many EU countries, especially along the Mediterranean). The result is visible infrastructure improvements particularly at municipal level.

Higher up the blockages are largely caused by conflicting organs of government where heads have to be "banged together" and clear lines of authority, coordination and responsibility laid down. That is not a process which takes place overnight. Its a pity that the current system in Poland is still largely based on 45 years of Soviet communism and 123 years of Tsarist rule, rather than Prussian rule. The differences in infrastructure between Polish central/western ex Prussian and eastern ex Russian areas is very noticeable, even after over 90 years of full or partial independence.

@The North Pole:
"It is illusion that Polish dysfunctional administration is just a temporary result of the communist past and lack of capital."

Before the WW2 we have had quite effective govrnment. It had big flaws, like autocracy period, and was unfortunately slightly nationalists, but it worked. What changed, so we now have so ineffective administration workers and politics?

I think it's fault of PRL, because that's what happened in the meantime.

Anyway - whomever fault it is, the fact remains - we have to change it.

Criticizing what's bad is necessary, but it's not enough - people are complaining all the time. So what should we do?

Vote people we know are honest, not parties that promises the most for our particular group of interests. The problem is - all popular parties promises more administration, not less, because the greatest group of voters are acustomed to social security. So we have nobody to vote for.

About known shale gas reserves - we had no technology, and the whole concept of using these reserves was proven working only recently.

On a more general note, Economist published a set of studies, that vast natural resources don't make a country wealthy. In poorly governed countries they ignite civil unrests, let dictatorships emerge, produce income inequality and harm development of other sectors of economy.

It would be useful to analyze these studies in relation to Poland, before it becomes DR Congo or Nigeria version lite.

@mikeinwarsaw, wtf is pen name
Negative is not the same as untrue, isn't it?

It is illusion that Polish dysfunctional administration is just a temporary result of the communist past and lack of capital. It survives different governments. It persists for 20 years during which a whole new generation of Poles grew. Young newly trained people didn't reactivate the non-fuctioning administration but had to seek work abroad, often in building industry. In the same way, EU accession didn't make Greece equal to Germany.

The motorway scenario will repeat itself with shale gas, although specific inefficient procedures, bad laws, all-blocking courts and corrupt clerks will be different.

BTW, shale gas reserves in Poland are known and were mapped in 1980s. During that time, allegedly, communist USSR prevented Poland from becoming a rival in energy production. But why it took 20 years after fall of communism to become interested in it?