GAS LNG 17 June, 2019 11:00 am   
COMMENTS: Piotr Woźniak

Woźniak: Thanks to LNG from US we will get rid of Yamal contract (INTERVIEW)

– Yes, we’ll get rid of it. This is a good term. The terms of the contract with Gazprom are extremely unfavorable to us – said PGNiG President Piotr Woźniak a few moments after signing the annex increasing LNG supplies from the USA to Poland. Mr President, what are the exact assumptions for a new contract for LNG supplies from the United States?

Piotr Woźniak: We concluded an annex to the contract signed last year with the American company Venture Global, which builds two terminals for liquefying gas on the coast of the Gulf of Mexico in Louisiana. The signed contracts guarantee delivery of 1 million tonnes of LNG from the Calcasieu Pass terminal and 2.5 million tonnes of LNG from the Plaquemines LNG terminal per year. The annex for the supply of 1.5 million tonnes of LNG annually applies to deliveries from the Plaquemines terminal – thanks to them we will have a volume of 3.5 million tonnes, which gives approx. 4.7 billion cubic meters. of regasified raw material. In total, we contracted about 9, 45 billion cubic meters from American partners of natural gas, or close to the volume, which we are forced to receive under the Yamal contract until the end of 2022.

So in 2022 we will get rid of the Yamal contract?

Yes – we will get rid of it – this is a good term. The terms of the contract with Gazprom are extremely unfavorable to us. It is an old type contract, based on indexation to crude oil, with clauses that virtually do not allow any flexibility on the part of the customer. For several years, such contracts are no longer included. We are a responsible company, we have a large client portfolio. Only in Poland there are 6.5 million individual customers who use gas for their own needs, so we cannot accept agreements unfavorable for the company and its clients in our trade relations.

Has the Russian side been informed that the contract will not be extended?

The decision must be communicated before the end of this year as well as the letters must exchanged before this time. Three years before the contract expires, both sides must inform each other about their intentions regarding the extension of the contract.

So this today’s contract is another step towards diversification, so that we no longer have to be at the grace and disgrace of the Russians?

Yes, because there are no any bungles and abuse of the contractual position on the American side. What counts is business and understanding customer needs based on respect and partnership treatment. Besides, with no other company, which we trade with we have had problems, apart from Gazprom. We have to deal with this, because these problems have been going on too long – since 1989.

And will cooperation with Americans be developed? Can we expect more contracts?

Of course, we are open to attractive proposals. Today we have signed an annex to the contract that has the FOB (Free on Board) formula, which means that we buy gas from a supplier which does not have a predetermined delivery direction, because it depends on us. It gives us extreme flexibility and we were trying to achieve the same conditions in case of Yamal contract, but of course it failed, due to the absolute lack of will on the part of the seller. In the case of cooperation with the US, as part of contracts with the FOB formula, we can transport gas freely, where we want and make decisions in the best interests of the company and customers.

Interview by Joanna Kędzierska