Poland Sees Clearer Picture on Shale

The feasibility of shale gas production in Poland will become clear over the next year-and-a-half, said Stanislaw Rychlicki, supervisory board chairman of state-controlled natural gas monopoly PGNiG SA.

“Perspectives for shale gas will be determined over the next year-and-a-half through 30-40 test drills that will be done by various companies” he said in an interview Wednesday. “It will then turn out which of the three scenarios we’re dealing with: reserves so scarce there’s no point in drilling, large reserves but costs too high, or large reserves and acceptable costs.”

U.S. energy giants are drilling in Poland after initial geological research showed the country may have substantial amounts of shale gas, mostly in the north and east where some experts see deposits between 150 billion and 3,000 billion cubic meters.

Illicit Cigarettes Flood Into EU From the East

Millions of illegally imported cigarettes, many made specifically for smuggling in the Russian enclave of Kaliningrad, are distributed within the EU every year after passing Poland’s northeastern borders. The point of entry isn’t accidental: Kaliningrad is surrounded by the European Union’s passport-free Schengen zone.

Cigarette smugglers try their luck on border crossings with Russia and Belarus, and the open border with Lithuania, where customs officers use increasingly sophisticated x-ray machines and sniffing dogs to stop them.

“The majority of those crossing the Polish-Russian border are smugglers,” says the regional customs office based in Olsztyn, in northern Poland. The region borders with the region of Kaliningrad, where Baltic Tobacco Factory produces Jin Ling, a brand not available through legal channels in the EU. The company hasn’t returned calls for comment.

Its cigarettes cost $3.20 for a carton of 10 packs in Russia. On the Polish side, they cost almost $2 per pack and around 3 pounds in Britain, Polish authorities say. Varying tax rates are a major factor behind the price differences.

Hungary to Quiz Citizens About New Constitution

Hungary’s new government is determined to replace the country’s constitution with a new one as part of its plan to radically change the country. The governing Fidesz party says that, since it has two-thirds of the parliament seats, political stability enables it to draft a new constitution it sees as long overdue.

“Hungary is the only country in the post-communist region that hasn’t adopted a new constitution,” Gergely Gulyas, Fidesz MP and vice-president of the parliament committee in charge of drafting a new constitution, told New Europe. “The constitution is the most important piece of legislation—it tells something about what a country thinks of itself. Hungary lacks this.”

The current constitution doesn’t have a chapter on public finance, unlike German or Polish counterparts, Mr. Gulyas added. Prime Minister Viktor Orban has asked parliament to include the chapter as a constitutional guarantee of responsible management of sovereign debt and public assets. The chapter is supposed to come with a ceiling for public debt.

Fidesz sees it unnecessary to hold a national referendum on the new constitution, saying its sweeping election victory last year gave it the political mandate to adopt it without asking voters again. It’s nevertheless seeking the public’s involvement, with a questionnaire.

Fidesz will in the coming days send the questions below to all eight million Hungarian voters, with multiple choice answer options that haven’t been provided yet. Voters will be able to express opinions at the end of the questionnaire. No postage will be required to send the questionnaire back to the National Consultation Board.

After 20 Years With Volkswagen, Skoda Auto to Rebrand, Deepen Asian Push

March and 2011 will be exciting for car maker Skoda Auto AS.

The Czech company next week will unveil a new logo, revamped corporate graphics and its latest model design study at the Geneva auto show. The presentations precede the mid-March release of 2010 financial results that, if the already published full-year unit sales figures are any indication, should be the company’s best ever.

But perhaps most interesting of all is that April 2011 marks 20 years since Volkswagen AG made a huge strategic gamble and began investment that eventually led to full ownership of Skoda Auto.

The car maker will introduce its sixth model line later this year, a small car for urban use for now dubbed the Small Family Car. Next year Skoda Auto will introduce its seventh model, which will be the first car incorporating the new logo.

Polish Gas Firm Pulls Out Employees from Libya

Polish state-controlled gas firm PGNiG said Monday it’s evacuating all of its employees from Libya due to violent clashes between security forces and protesters in the country.
The company decided last week to pull out the employees of its local unit, Polish Oil and Gas Company Libya, which has about 30 people on staff.
PGNiG has an exploration license about 1,500 kilometers from Tripoli, under an agreement it signed in 2008 with the Libyan government, the company said in a statement. It completed seismic research last year and plans to drill for hydrocarbons in 2011.

Hungary May Restrict Non-Residents’ Voting Rights

Hungary may get up to 700,000 new citizens now that it offers citizenship to ethnic Hungarians living in neighboring countries. The group equals nearly 9% of registered voters, but it remains to be seen if Hungary gives its new citizens the right to vote.

Under the new simplified procedure, citizens of another country who speak Hungarian, have a Hungarian parent—including ethnic Hungarians  even without a  Hungarian citizenship—may apply to become citizens of Hungary.

The legislation may affect a conservatively estimated 2.59 million ethnic Hungarians living in neighboring Slovakia, Romania, Serbia, Ukraine, Austria, Croatia and Slovenia. Ancestors of many of them found themselves outside Hungary when the Austro-Hungarian Monarchy collapsed after World War I and borders shifted in 1920.

Polish Industrial Output Soars in January

Poland’s industrial output slowed somewhat in January, but stayed in double figures. Output in January rose 10.3% on the year earlier compared with a revised 11.4% increase in December, the Central Statistical Office said Friday.

The reading was above the average forecast of a 9.4% rise in a survey of 10 bank economists.

Seasonally adjusted output grew 8.4% on the year in January compared with a 11.5% annual increase in December.

Polish producer prices rose at an annual rate of 6.2% in January, which was slightly below the expected 6.3% increase but was unchanged from the revised figure for December.

The figures support the view—already supported by the January consumer price inflation at 3.8% on the year—that Poland’s monetary tightening will continue when rate setters meet next month.

Hungary to Leave Controversial Media Law’s Core Intact

Hungary has drafted a new version of its media law after criticism from the European Commission. Most of the controversial sections will remain unchanged.

The government says that the amendments won’t change the legislation much. They will only make the law “more precise,” while preventing “Hungary from losing its prestige,” said Zoltan Kovacs, Hungarian state secretary in charge of communication. The Hungarian parliament could approve the changes within two weeks, Kovacs said.

The law will continue to say that the freedom of the media can’t infringe on public morality or offend human dignity. No clarification will be given to define those values. They will be interpreted by the Media Council, whose decision-making bodies include only members appointed by the governing Fidesz party.

A release by the Media Council, on a petition from the Hungarian Wives’ Association, sheds light on how public morality may be interpreted. The council wrote Wednesday that its president Annamaria Szalai endorses this message:

“A wife’s most natural profession is creating life and being a mother, which can be fulfilled in a family. … That’s why it would be inevitably necessary on the media’s part to observe female dignity and to endorse the virtues of motherhood, family and marriage.” It is unacceptable for the media to spread “an impermissibly positive view about marital infidelity, divorce, free sexual life, pornography, and to discard the rights of children,” reads the statement.

Polish Inflation Overshoots Central Bank’s Target Range

Poland’s annual inflation rate overshot the central bank’s target range in January, strengthening the zloty and raising expectations of an increase in interest rates.

Consumer prices rose to 3.8% in January from 3.1% in December 2010, according to figures released Tuesday by the Central Statistical Office, or GUS. The central bank’s CPI target is 2.5%, with the tolerable range at 1.5% to 3.5%.

The annual inflation figure was above the average forecast of 3.4% in a Dow Jones Newswires survey of 10 bank economists.

The high CPI reading for January contributes to expectations that monetary policy tightening will continue after the Monetary Policy Council raised rates in January by 25 basis points, lifting the reference rate to 3.75% and ending a 19-month period of record-low rates. The MPC’s next rate decision is scheduled for March 2.

The zloty strengthened following the news, moving the euro/zloty pair below 3.93 immediately after the release. At 1450 GMT, euro/zloty was at 3.9144 from 3.9449 late Monday.

Hungary Fiscal Plan Still in the Making

Hungarian Prime Minister Viktor Orban Monday disappointed those who expected a coherent plan for fiscal tightening. It will be presented, but only in a month from now. Anticipation of Hungary embarking on a program that cuts spending and makes the budget sustainable in the medium term has kept the Hungarian currency and government bonds strong for the past month. And yet on Monday, instead of talking about the future, Mr. Orban sought to defend his government’s controversial steps already in place.

Hungary’s much-criticized new media law “served as pretence to launch an attack on the country and to question Hungary’s commitment to democracy, ignoring the dignity of Hungarians,” he said.

Extraordinary taxes the country levied on certain companies may evolve into a different type of tax after three years, he also said.