Poland Turns to U.S. for LNG

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Poland has taken steps to reduce its reliance on Russian gas by signing a landmark 24-year deal for liquefied natural gas (LNG) with U.S. supplier Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas).

The deal signed with state-owned Polish Oil & Gas Company PGNiG was announced at a joint conference attended by Polish Minister of Energy Krzysztof Tchorzewski and U.S. Secretary of Energy Rick Perry. Perry said: "This is a signal across Europe that this is how your energy future can be developed, the security of the country, the diversity of supply--this is a great day for Europe."

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. Between 2019 and 2022, Cheniere will supply PGNiG approximately 0.52 million tonnes of LNG, or approx. 0.7 billion cubic metres (bcm) of natural gas after regasification. From 2023-2042, the total import volume will reach 29 million tonnes of LNG, which equals roughly 39 bcm of natural gas following regasification. Annually, it will amount to 1.45 million tonnes of LNG, which equals 1.95 bcm of natural gas after regasification. The company's did not reveal the value of the deal, but PGNiG's Piotr Woźniak, president of the management board, said that the price would be 20% to 30% less than the price Poland pays for Russian gas from state-owned Gazprom (PINK:OGAZPY) (Moscow).

"The agreed conditions, including the competitive price, are fully satisfactory for PGNiG," Woźniak added. "Thanks to this agreement we will have regular supplies of LNG from the U.S.A. starting as early as 2019. The share of LNG in our import portfolio is constantly increasing. The world's liquefied natural gas market is rapidly growing and allows us to select the best offers in this area."

"PGNiG is an important partner for Cheniere in a growing part of the European market, and we look forward to our long-term relationship providing PGNiG with clean, secure, and flexible LNG," said Jack Fusco, chief executive officer of Cheniere. "This contract supports our growth plans at Cheniere, continues our momentum of signing a diverse range of customers around the world."

Last month, PGNiG signed a 20-year LNG deal with U.S. supplier Venture Global LNG Incorporated (Washington, D.C.). The company has committed to take 2 million tonnes per annum of LNG, which is approximately 2.7 bcm of natural gas after regasification, and this equals--depending on the vessel capacity--over 25 cargoes a year. 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.

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