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    Poland Buys More US LNG

Summary

The price will be linked to the Henry Hub but this time it will include freight.

by: William Powell

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Poland Buys More US LNG

Polish state-run PGNiG and US Cheniere Marketing International have signed a long-term sales and purchase agreement for LNG, the two companies said November 8. 

In 2019-2022 PGNiG will take about 0.52mn metric tons (mt) and over 2023-2042 this will rise to about 1.45mn mt, or about 1.95bn m³ after regasification. It told NGW that the purchase price is indexed to the monthly US Henry Hub price.

LNG cargoes will be supplied on an ex-ship basis to the President Lech Kaczynski LNG Terminal in Swinoujscie on Poland's Baltic coast, with delivery provided by the seller.

“The agreed conditions, including the competitive price, are fully satisfactory for PGNiG. Thanks to this agreement we will have regular supplies of LNG from the US starting as early as 2019. The share of LNG in our import portfolio is constantly increasing. The world’s liquefied natural gas market is rapidly growing and allows us to select the best offers in this area,” said CEO Piotr Wozniak.

Cheniere's CEO Jack Fusco said PGNiG was an "important partner for Cheniere in a growing part of the European market, and we look forward to our long-term relationship providing PGNiG with clean, secure, and flexible LNG. This contract supports our growth plans at Cheniere, continues our momentum of signing a diverse range of customers around the world, and reinforces our position as the leader in US LNG,” he added. 

LNG cargoes from Cheniere heading for Poland will depart from liquefaction facilities in Sabine Pass, Louisiana and Corpus Christi, Texas. Cheniere withheld about a tenth of its plants' output for its own use and also to provide some insurance against outages.

PGNiG's existing arrangements

The Polish firm is also buying 2mn mt/yr from Global Venture for 20 years, subject to final investment decisions on its two plants, after firming up a preliminary offtake agreement in October; those cargoes will be sold free on board and so might go to other markets as well as Poland. PGNiG this summer signed a preliminary agreement to offtake 2mn mt/yr from Sempra  for 20 years that is yet to be firmed up.

PGNiG's main gas supplier at present is Gazprom under a 10-year agreement that runs to 2022, but it wants to lessen its reliance on such Russian piped gas. In March 2017, PGNiG signed a deal to double up its LNG offtake Qatargas to 2mn mt/yr  during the period from January 2018 until June 2034; that Qatari contract currently represents its main source of LNG until most US supplies start in the early 2020s.