GAS LNG 19 October, 2018 10:00 am   

You bring LNG from the US, and the Russian media will talk

Kommersant wonders why US liquefied gas will not replace supplies from Gazprom to Poland. It argues that deliveries from Russia must be cheaper. However, even from its own calculations, it appears that the Yamal contract is more expensive – writes Wojciech Jakóbik, editor-in-chief of

Kommersant states that “the position of the Polish PGNiG on the supply of LNG from the USA, that it is cheaper than gas supplies from Gazprom, is not related to reality.” – The claimed advantage of 20-30 percent results from the comparison of the price of LNG delivered to a tanker in the USA with the price of Russian gas delivered to the Polish market. According to Yuri Borsukov from Kommersant, this means that the advantage of a lower LNG price for Poles is negligible and it is more profitable for them to re-export LNG from the USA.

According to Kommersant, the statement of the president of PGNiG Piotr Woźniak, who assessed that deliveries of LNG from the USA under two new contracts of his company will be “cheaper by 20 percent” than those under the Yamal contract, is imprecise. The newspaper determined that the president was referring to the price in American ports in the Gulf of Mexico, which is currently at the price of Henry Hub about 235 USD for 1000 cubic meters, which is actually about 20 percent less than 295 USD estimated by Kommersant for the third quarter of this year in the contract PGNiG Gazprom. – However, if we add the costs of gas supply from the Gulf of Mexico to Poland (USD 1 per mBtu) and regasification (PLN 0,4 per mBtu), the costs will be almost the same as gas supplies from the Russian Federation – writes Borsukov.

However, it does not specify whether LNG from the USA will be more expensive then. If we convert mBtu to cubic meters, it turns out that USD 1,4 per mBtu equals USD 51,66 per 1000 cubic meters, which in turn means that according to calculations Kommersant, LNG from the USA in contracts with Louisiana can cost 286 USD 66 per 1000 cubic meters, which is still cheaper than deliveries under the Yamal contract, although not by 20 percent declared by PGNiG.

Kommersant no longer provides that. It is also following the vision of Poland as an irrational gas merchant. – However, if the agreement is more political for Poles, the Americans will be directly interested: their LNG terminals have not yet been created and need contracts guaranteeing financing – writes a Russian journalist in a commentary on two new LNG agreements signed by PGNiG. On their power respectively from 2022 and 2023, Poles will receive 1 million tons of LNG per year for 20 years from two American companies from Louisiana.

Borsukov points to the free on board (FOB) clause in contracts that “does not guarantee that gas will reach Świnoujście.” PGNiG, however, presents this as an advantage because it aims at the global market. According to Borsukov, it is not certain whether LNG terminals dedicated to deliveries to Poland will be created at all, because they will still have to get financing. However, a few sentences earlier, the Russian analyst admits that such a guarantee gives a contract with PGNiG. He can not decide.

It is worth assuming that the Russian media will criticize in advance the diversification of sources of gas supplies to Poland. In the case of criticism of new LNG contracts with the USA, however, at least the unreliability occurred. This is nothing new in the Russian media, which even happened to invent statements by representatives of Poland.