GAS LNG 9 November, 2018 9:00 am   
Editorial staff

Polish Briefing: PGNiG-Cheniere agreement. Partnership on the eastern flank for years

What goes on in Poland on the 9th of November.

PGNiG-Cheniere agreement

PGNiG signed a contract with Cheniere Energy for LNG supplies from the USA to Poland. It is to be another element of long-term political and economic cooperation of both countries.

PGNiG signed a long-term agreement for 24-year LNG supplies from the USA from Cheniere Energy. The contract is for deliveries of 0,52 million tonnes of LNG (0,7 bcm after re-gasification) in the years 2019-2022 and about 29 million tons (about 39 bcm) in 2023-2042. The contract includes the Delivery ex Ship clause, which transfers the responsibility for delivering the cargo to an American supplier.

President Andrzej Duda reminded that two years had passed since the talks during the visit of US President Donald Trump to Poland when the subject of LNG supplies from the USA was submitted. Duda reminded that the Poles were interested in the condition of presenting an economically attractive offer.

– Today, Cheniere Energy will conclude an agreement with PGNiG for long-term LNG supplies to Poland – he said. He reminded that it would not have been possible without the initiative of the President Lech Kaczyński, who initiated the construction of the LNG terminal in Świnoujście. – Poland has a terminal in Świnoujście and is expanding it – he said.

He added that the Baltic Pipe gas pipeline is to be created in order to ensure diversification of gas supplies. Both projects can be used by Poland and its neighbors if they are interested.
– Poland wants to cooperate in the field of security. Today, American military units are present on Polish soil. I am glad that this cooperation is also developing in the economic sphere. This is the real economic partnership – the President concluded. – I hope that this contract, meaning long-term cooperation, will be the introduction to further joint action – he concluded.

– The future of Europe will depend on Poland’s decision in the next years, especially in the energy sector – said US energy secretary Rick Perry. – Our bond is directly related to energy. Diversification in the energy sector is crucial for Poland’s position. You see it, your leadership sees it – he added.

– It is a signal to the rest of Europe about what the future of energy can look like. It is a great day for Europe. You will not be more limited as to where you buy gas and how you use it – said Perry. – It’s hard to send a stronger message than this one today – he finished.

– This atmosphere is a priceless thing that will enable the development of cooperation that we show today in practice. This is the future for the next decades – said the government plenipotentiary for strategic energy infrastructure Piotr Naimski. He read the letter from the President of Law and Justice Jarosław Kaczyński in this matter.

– Today’s event is part of the Polish direction of supply diversification, energy security of the eastern flank of Europe – said energy minister Krzysztof Tchórzewski. In his opinion, cooperation with the USA is a pillar of Poland’s freedom and security. – The agreement is another contribution to the construction of Poland’s energy security after the expiry of existing agreements – he added.

– I hope that this is only a prelude to further cooperation, and Poland and the United States will undertake further undertakings strengthening it – declared the minister. He stressed that this is a matter of security for Poland.

Two more contracts coming up

The president of PGNiG has announced the signing of two further contracts for the supply of American liquefied gas. – The contract is concluded for a long period – admitted the CEO of PGNiG Piotr Woźniak. In his opinion, the agreement is the result of annual negotiations with a sales office in London. – There were no shortcuts, there were turning points, but eventually there is an agreement – he added. He announced that two more contracts could be signed.

In his opinion, LNG and gas purchases from Norway are intended to diversify, not to justify the economic construction of the infrastructure: LNG terminal and Baltic Pipe. – We do not do this only for our own satisfaction, but the benefits that our clients will receive with the help of well negotiated contracts – said Woźniak. He reminded that deliveries from Russia were interrupted seven times without reason. – In the case of a contract with Cheniere, there is no such risk.

– These are 20-30 percent better conditions than in the Yamal contract – the head of PGNiG said. Deliveries in the summit are expected to amount to around 2 billion cubic meters annually. He admitted that in the future, the development of supply from alternative directions may allow for the abandonment of Russian supplies. He reminded that LNG from Poland goes to the local market and the volume of supplies will grow.

– We have no restrictions. The terminal is an extremely flexible tool – assured Woźniak. – Cheniere is our regular partner for the next 24 years. At least in this perspective, we have stabilized the Polish market against unexpected supply interruptions, which should not happen any more.

According to the president of PGNiG, the contract has 20-30 percent better conditions than in the Yamal contract. The entire supply chain is the responsibility of Americans through the DES clause. – It is enough to support Cheniere’s investment plans – said Piotr Woźniak. The gas is to arrive from the terminals Sabine Pass LNG and Corpus Christi LNG. A representative of Cheniere Energy acknowledged that the contract contains a record allowing for the change of collection points. – Deliveries are dedicated to the Polish market – said Woźniak. – The price obtained in the negotiations is much lower than in the contract with Gazprom – he added. The chairman said that the gas was to come from shale deposits.