Norwegian Corridor 19 December, 2017 11:00 am   
Editorial staff

Poland is building the North Gate. Competition admits to have concerns

– The Polish LNG terminal will be expanded with a third tank and new functionalities. Should the Baltic Pipe fail, a floating LNG terminal will be built. These projects that make up the Northern Gate are a threat to the position of the current dominator in the region, Gazprom, who already admits it. In the meantime, they want to renegotiate the price with PGNiG – says Wojciech Jakóbik, editor-in-chief of

On the eleventh of December, a conference will be held under the name: “Liberalization of the Gas Market in Poland and Energy Security 2017” under the patronage of It takes place at a decisive moment for the Northern Gate project. The gas pipeline from Poland, through Denmark to Norway, i.e. the Baltic Pipe or the Norwegian Corridor, is waiting for the final investment decision. A decision was recently made to build a third tank at the LNG terminal in Świnoujście.

The third thermos will increase the flexibility

In April 2017, the decision was made to expand the Lech Kaczyński terminal. After completion of works, its regasification capacity will increase from 5 to 7.5 billion cubic meters due to the increase in the number of SCV regasifiers (so-called heaters). However, this is not all. The company recognizes the high potential of liquefied natural gas used as fuel – it wants to develop LNG loading and bunkering services, as well as directly supply liquefied natural gas to customers using car and railway logistics. Gaz-System decided to build a second ship station. This is a chance of reloading without collision with the receipt of regular deliveries and the development of the bunker and small-scale supplies on the Baltic Sea, i.e. the small LNG. The company also plans to build a railway siding, which opens up the prospect of gasification of the country using LNG, and the construction of a third LNG tank. The construction of a CHP plant at the terminal is under consideration. It is worth remembering that the Dolna Odra Power Plant belonging to Polska Grupa Energetyczna is to be enriched with a gas block. The reason may be, among others, the proximity to an attractive gas source.

As part of the preparations for the construction of the third container, Gaz-System is looking for the right technology. It is supposed to provide for a more flexible operation of the terminal, because it would allow to manipulate the volumes stored in Świnoujście, thus improving its profitability. When LNG is stored, evaporation occurs, which forces to repeated condensation, and therefore results in additional costs. According to estimates of, the loss of LNG during the cruise is up to 0.25 percent of the volume per day. For this reason, adequate thermal insulation is necessary. There are different types of tanks – spherical (Norwegian), membrane (French), IHI (Japanese). There may be steel tanks without a protective casing, steel ones with an additional concrete protective jacket and a full concrete jacket. The tanks in Świnoujście use this last technology. It’s a steel tank hidden in a full concrete tank that works like a thermos. Thus, it is possible to divide the tanks into membrane and concrete-cased tanks. The first ones are insulated with plywood. The latter are additionally protected with a nickel layer. The level of evaporation depends on this.

Interestingly, the two existing tanks have a capacity of 160,000 cubic meters. The third tank can, according to the Gaz-System declaration, have up to 220,000 cubic meters. The installation could be ready in 2021-22. Gaz-System is considering technological cooperation at the third tank, among others with Australian companies, which due to their experience in this area were invited to the November conference in Warsaw. Also in April this year, ILF Consulting Engineers Polska signed a contract with Gaz-System for the preparation of a feasibility study along with preparatory works for the Floating Storage Regasification Unit (FSRU). It would be an object similar to the one stationed in Lithuanian Klaipeda. It is a ship with LNG tanks on board that allows regasification. The advantage is the low cost and fast pace of this type of investment, and the disadvantage is lower flexibility compared to a ground-based facility. I wrote more on this subject in the comparative analysis of the FSRU in Lithuania with the Polish terminal.

By the end of the year, the Gaz-System management is to make a decision regarding the recommendation for the tank. It is not known what it is going to decide.

Plan B is prepared

The investment would allow for delivery to Poland from 4.1 to 8.2 billion cubic meters of liquefied natural gas annually. In addition to transport of liquefied gas, the tanker would also enable reloading and bunkering (refueling) of LNG-powered vessels. The results of the study were to be presented in November. A regasification vessel could be stationed, for example, in Gdańsk. This location in the past was taken into account by PGNiG for the gas port installation. There is the Kosakowo gas storage nearby and gas pipelines necessary to deliver the material to other parts of the country. However, according to the Gaz-System strategy, construction of the Baltic Pipe remains the A plan until 2025. Perhaps this is the result of the company’s little communication about plan B – or FSRU, which despite the progress of the Norwegian project is being prepared. Poland is prepared for various possibilities and in case of problems with the  Baltic Pipe (planned 10 billion cubic meters per year) it will be able to increase the possibility of importing gas from outside Russia by 8.2 billion cubic meters per year thanks to FSRU. Baltic Pipe is to be ready by October 2022, and FSRU by the first half of 2021. So it’s not like the Poles are betting on one card. The fact is, however, that gas pipeline supplies can be permanently competitively priced in comparison with supplies in a liquefied form. Long-term, affordable LNG supplies would be possible after negotiating an innovative pricing formula requested by Polish PGNiG.

LNG is a real threat to Gazprom

This possibility should not be depreciated. The importance of liquefied gas is appreciated by more and more companies in Europe. PGNiG signed a contract for up to nine deliveries from British Centrica within the period 2018-22. Austrian OMV involved in the Nord Stream 2 project, despite official declarations that LNG cannot compete with deliveries from this project, have signed an agreement with American Cheniere Energy for the supply of liquefied gas of a secret durability and volume. It is worth recalling that a similar contract was signed in August 2015 by the French EDF. More on this topic is written by Bartłomiej Sawicki from

It is also worth noticing that Japanese JERA is considering cooperation in the LNG trade with the French EDF. Therefore, it may turn out that should the demand for liquefied gas on the Cherry Blossom Islands drop, the raw material ordered by the Japanese with a volume of about 35 million tones of LNG per year (15 per cent of deliveries in the world) may reach Europe, increasing the supply of liquefied gas. Due to the fact that it is going to be an attempt to remove the surplus, price-attractive contracts for continental companies will be possible. The Financial Times reminds us of Jera’s potential. Fifteen percent of LNG supplies in the world are comparable in scale to the entire extraction of Saudi Arabia and Iraq in the oil sector.

Due to the persistent oversupply on the liquefied gas market, one should expect a growing presence of this type of fuel in Europe and further contracts threatening the position of Russian Gazprom. Even LNG from Russia threatens it. Nikolay Kislenko, deputy director of the development department at Gazprom, admitted that every cubic meter of liquified gas supplied to Europe means the loss of one meter of deliveries through gas pipelines from Russia. He said this in the context of the Yamal LNG project launched in December 2017, which is to provide Novatek with a capacity 16.5 million tones of LNG per year for export, compared to the current 5.5 million tones.

In fact, the project is not as dangerous as American terminals, because it is aimed at the Asian market and will be more profitable than gas pipelines in deliveries to Europe over a distance of over 4,000 km, i.e. to Spain, poorly communicated with the rest of the continent. In France, this gas will have to face the supplies from Cheniere Energy mentioned above. According to Alexei Grywacz, deputy director of the National Energy Security Fund, even the development of LNG supplies from Yamal to Western Europe may indirectly threaten gas pipeline supplies. Ultimately, the possible conflict of interests of Novatek-Gazprom may be judged by the Kremlin, which has been supporting the gas pipeline monopoly so far, i.e. to the disadvantage of the Yamal LNG operator. It is also worth reminding that the Yamal LNG raw material base belongs to Gazprom, and Russian President Vladimir Putin has already made attempts to become interested in the offer of Yamal liquid gas from Saudi Arabia, which thanks to LNG could reduce its dependence on oil.

However, the growing awareness of the threat posed by LNG from non-Russian sources is visible on the Russian side. Although it does not break into the media intended for audiences in the West, its significance grows in the discussions of companies. Therefore, the LNG terminal in Świnoujście and the considered FSRU should be considered as full-value diversification tools from the point of view of security, but also the possibility of price arbitrage.

Does Gazprom relax its demands or check cards?

When it comes to prices, a positive signal from a Russian giant has recently appeared. Gazprom wants to renegotiate the price of supplies to PGNiG. Negotiation window under the Yamal contract opened in November. A Polish company turned to Russians with a similar proposal. It refuses to negotiate according to Gazprom’s request, accusing it of formal errors. I wrote briefly on this topic on Saturday, December 9th. I also commented on this topic for the Polish Press Agency.