Ukraine may soon bring LNG from the USA through Poland. It is not known whether it comes to additional deliveries from the entire portfolio or a dedicated package, as in December 2017 – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
Ukrainians talk about price conditions for gas supplies from the USA to their country. In the past, they have already received LNG through Poland. The imports took place via PGNiG and ERU Trading. It is a small company founded by Americans which assumes responsibility for security of supply. Poles give it gas from the portfolio, and it sells gas on the Ukrainian market. Since April 2017 ERU Trading, a subsidiary of the American ERU Corporation, has political risk insurance (PRI), which was provided by Overseas Private Investment Corporation (OPIC). It is a government investment institution.
Thanks to the blessing of Washington, LNG loads received in Świnoujście can be sent to our eastern neighbor. Gas is extracted from the entire portfolio, but „dedicated packages” from LNG are also possible if the terms of delivery are attractive enough. The chairman of Naftogaz Andriy Kobolev talked about them in Washington. – It is no secret that the United States supports the export of American companies by providing them with funding and by insuring risks. We should prepare for potential provocations on the part of Russia, as well as for the upcoming winter, so additional gas reserves should be accumulated. Support in this form would be very helpful – said the Kobolev quoted by BiznesAlert.pl.
It so happens that the current conditions on the LNG market are the best possible for spot deliveries. LNG prices in Asia temporarily fell below European levels, which has increased the attractiveness of supplies for Europe. This trend explains the intensification of PGNiG spot orders, which in 2011 brought in five spot loads, and last year there were only „four”. The last spot, by no accident, has arrived from Sabine Pass LNG in Louisiana. The Americans also want to take advantage of the growing attractiveness of Europe. During the industry conference GAZTERM in Międzyzdroje, under the patronage of BiznesAlert.pl, Sempra LNG and Cheniere Energy advertised their installations and volumes that made an impression.
The spot delivery orders are submitted by the trading office of PGNiG in London. The company intends to increase its personnel, because LNG trade on the global market gives money, but it requires more and more work. – Margins in LNG trade are very high, comparable to the level of gas extraction margins. During the year, we will be able to communicate more about transactions with third markets, except for Poland – said PGNiG president Piotr Woźniak at GAZTERM. Therefore, one should expect further spot transactions, some of which may reach Ukraine. The US company’s umbrella protects these transactions and is a model of this type of cooperation for other companies that are considering involvement in Ukraine. The preparation phase is the involvement of Western companies in gas pipeline supplies in Ukraine, which could potentially engage Gaz-System, but for the time being the company retains a reserve.
The phenomenon described shows the global and changing nature of the LNG market. It is global, because loads can reach different places on earth depending on the need, and the recipient can turn into a trader under the condition of a Free on Board clause in the contract. It is volatile, because the period of greater attractiveness of the European market, which is beneficial for Polish gas operators, may soon end, which is suggested by the data on the increase in gas consumption in China. LNG loads will then flow elsewhere, which does not exclude PGNiG’s earnings on margins for transactions outside the Polish market. This is what for the office in London exists.