Poland signs up to LNG deliveries from US

By bne IntelliNews April 27, 2017

PGNiG has signed a spot deal to buy LNG from the US, the Polish state-controlled gas company said on April 27. The purchase see US LNG arrive in Central & Eastern Europe for the first time, with Warsaw accelerating efforts to expand alternatives to buying in Russian supplies.

The Polish company will buy an undisclosed volume of LNG for an unknown price from Cheniere Energy. The company is the operator of the only LNG export terminal in the US.

For the Americans, the deal could open a new region in Europe for its gas which is competitively priced thanks to booming production from shale. Poland will hope the deal will prove yet option to Russian gas, which currently dominates its supply structure.

The LNG load from Cheniere Energy is expected to arrive in Poland in early June, PGNiG CEO Piotr Wozniak said, according to PAP. Poland consumes around 16bn cm of gas per year; Russia currently supplies around 70% of that volume under a long-term agreement. However, the deal expires in 2020. 

Poland has long said the Russian supplier Gazprom abuses its dominant position in CEE. PGNiG filed a complaint with the European Commission in mid-March, the Russian company said in its annual report published on April 27. PGNiG alleges Gazprom violates EU competition law by leveraging its dominance to charge unfair prices, preventing cross-border gas sales and tying commercial issues to infrastructure. The complaint follows an EU announcement the same month that it is ready to accept a compromise deal offered by Gazprom that would remove most of those issues, and crucially the cross border clause.

For its part, Gazprom has been busy trying to canvass support for construction of the Nord Stream 2 pipeline, which would pump an extra 63bn cm under the Baltic Sea directly to Germany. Poland and other CEE countries view the project with suspicion, claiming it will deepen dependency and see Ukraine lose vital transit fees.

Clearly keen to raise leverage on Gazprom ahead of any talks on a new deal, Warsaw appears increasingly confident it could source enough alternative supply to do without Russian supplies after 2020. Poland is currently buying LNG from Qatar under a long-term deal that expires in 2034. Warsaw is also working to build a pipeline to transmit gas from Norway – where PGNiG has production assets – via Denmark to Poland. 

The country has recently announced it wants to increase the capacity of its LNG terminal in Swinoujscie and possibly build a new floating terminal in the Gdansk Bay.

 

 

 

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