Poland inching away from LNG reliance on Russia - local contract about 20-30% cheaper

9/6/2019

WARSAW, (Reuters) - Liquefied natural gas (LNG) recently contracted by Poland's state-run gas firm PGNiG is 20-30% cheaper than the gas the company has to buy from Russia's Gazprom under a long-term contract, a Polish minister said on Friday.

Poland still imports most of the gas it consumes from Russia, but Warsaw has taken steps to reduce that reliance so that it does not have to extend the long-term deal on gas supplies after 2022 when it is scheduled to expire.

The country has significantly increased LNG purchases via its terminal in Swinoujscie on the Baltic Sea following PGNiG deals with Qatar and the United States.

Poland also plans to take gas from Norway through a planned gas link.

"This is a so-called take-or-pay contract, so we have to pay for the gas whether we take it or not and the price is absolutely uncompetitive," Piotr Naimski, Poland's plenipotentiary for strategic energy infrastructure, told a local radio Radio Warszawa when asked why Poland does not want to extend the Gazprom deal.

"At the moment the contracts signed by PGNiG regarding LNG supplies are 20-30% more advantageous than the Russian one," Naimski said.

Most recently, Venture Global LNG agreed to increase its LNG supplies for PGNiG from 2023 to 2.5 million tonnes annually from 1 million tonnes agreed earlier.

The agreement raised PGNiG's total commitment with Venture Global LNG projects to 3.5 million metric tons per year.

Poland received its first LNG cargo from the United States in 2017. It was a spot delivery from Cheniere Energy.