Poland, Ukraine and U.S. Sign LNG Deal

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Poland, Ukraine and the U.S. have signed a memorandum of cooperation to boost liquefied natural gas (LNG) supplies from the U.S. to reduce their reliance on Russian gas imports.

The memorandum was signed in Warsaw, Poland, by Ukraine's Secretary of the National Security and Defence Council Oleksandr Danyliuk, Poland's Piotr Naimski, secretary of state in the chancellery of the prime minister, and U.S. Secretary of Energy Rick Perry. A third of Europe's gas travels from Russia through Ukraine, but due to ongoing armed conflict in Ukraine with Russian-backed rebels in the Crimea region, gas supplies are under threat.

"We will take every effort to diversify gas supplies to Ukraine, which is now completely dependent on Russian deliveries," Poland's Naimski told media, as reported by Reuters. Naimski confirmed that Poland's imports of liquefied natural gas (LNG) from the U.S. via the Baltic Sea terminal at Swinoujscie have increased significantly in recent years. Poland plans to channel six billion cubic metres (bcm) of gas to Ukraine starting from 2021, compared with the current capability of 1.5 bcm. Last November, Poland's state-owned Polish Oil & Gas Company (PGNiG) signed a landmark 24-year deal for LNG with U.S. supplier Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas). Poland, like much of Europe, relies on Russian imports for two-thirds of its gas needs, but it is actively seeking alternatives with the U.S., Norway and Qatar. For additional information, see November 19, 2018, article - Poland Turns to U.S. for LNG.

After the signing, Ukraine's Danyliuk, commented: "A memorandum of understanding on trilateral cooperation with our partners the U.S. and Poland, to diversify sources of gas supply and enhance the energy security of Ukraine has been signed. One of the steps in this direction will be to adjust the supply of liquefied gas through Poland. For this purpose, a specialised interconnector will be built to unite the gas transport systems of Ukraine and the European Union (EU)."

In a statement, the U.S. Department of Energy stated: "The Department of Energy is committed to Ukraine's energy security and is sending an expert delegation to Ukraine to assist in the development of a Winter Action Plan to address critical needs for the 2019-2020 winter season, as requested by President Zelenskyy's Administration. This team will help ensure that the government of Ukraine is best equipped to ensure Ukraine is never again vulnerable to threats of supply disruption from Russia. The delegation will work side-by-side with Ukraine's experts to assess the interdependencies in the generation, transmission and distribution of energy across all sectors, and provide a framework to improve coordinated responses to energy shortages."

Poland uses roughly 15-16 bcm of gas annually, and in 2016 it commissioned its first LNG terminal in Swinoujscie and Industrial Info is tracking the construction of a small-scale LNG bunkering facility at the port of Gdansk. In July, Poland received the first cargo of LNG from Cheniere Energy under its long-term deal. LNG carrier Oak Spirit delivered 165,000 cubic meters of LNG to the Swinoujscie terminal.

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