Consortium that built Poland’s LNG terminal demands extra payment of €45mn

By bne IntelliNews July 19, 2016

A consortium of companies that built Poland’s LNG terminal is seeking an extra payment of PLN195mn (€44.6mn) from Polskie LNG, which operates the facility, a member of the consortium announced on July 19.

Polish construction company PBG, which is part of the consortium - led by Italian engineering company Saipem - said the consortium filed a request for arbitration against state-owned Polskie LNG, although it did not specify for what work it is seeking the extra payment. The terminal was delivered in 2015, a year behind schedule. The project was marred with disagreements with Saipem over timing and costs.

The terminal received first commercial cargo of 124mn cubic meters (cm) of gas from Qatar in June, as Poland attaches great hopes to the facility’s potential to reduce – if not end – Warsaw’s dependence on gas imports form Russia.

The terminal’s capacity of 5bn cm per year is equal to nearly a third of Poland’s annual demand of 16bn cm. A third of that demand is covered by domestic production, while until now, the rest has mostly been supplied by Russia.

Following the opening of the terminal, Poland said that it could refuse to sign a new long-term gas supply contract with Gazprom after the current deal expires in 2022 and opt for spot market purchases instead.

Russia's role as a gas supplier to Poland could diminish further should Warsaw decides to expand the terminal’s capacity. Poland has mentioned pushing the facility to 7.5bn cm or even 10bn cm. At the same time, there are questions over the terminal’s commercial viability, similar to ones posed about Lithuania’s LNG facility – also built to reduce Russian imports - since it launched at the start of 2015.

Poland does not appear to satisfy with LNG terminal as the only means to ensure becoming less dependent on Russia. Warsaw is currently hoping to build a pipeline to link its Norwegian gas fields to the Polish grid. Ukraine has also announced recently a gas link with Poland to be able to send or receive 5bn cm of gas annually.

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