More Money Needed for Polish LNG Terminal

By MarEx 2014-07-25 10:11:00

The consortium building Poland's first liquefied natural gas (LNG) terminal is in talks to increase the amount it is being paid, but there is no risk to the completion of the project, one of the contractors told Reuters on Friday.

The import terminal is being built on Poland's Baltic coast, at a cost of about 3 billion zlotys ($974 million), to cut the country's reliance on imported Russian gas.

The consortium comprising Italy's Saipem, Techint, and Polish construction firm PBG, is due to receive 2.4 billion zlotys, according to the contract signed with entity that commissioned the project, state-controlled Polskie LNG.

"The discussion is conducted in a very good climate, because everybody wishes the terminal to be finished within the agreed schedule", PBG spokesman Jacek Balcer said on Friday.

"Of course one of the issues being addressed is the fact that due to changes in Polish law the investment will take more time than it was expected at the beginning and because of that we will incur higher costs", he added.

An official with Polskie LNG also said that were talks on the contractors' payment.

"In justified cases, when we are dealing with events which occurred through no fault of the general contractor, we are ready to talk," said Maciej Mazur, a spokesman at Polskie LNG.

"There is no basis in fact to say that anybody has plans to terminate the contract. Both sides have the same goal. They want to finish the project on time and with the highest quality."

He said there was no risk of delays. The construction is to be finished at the turn of 2014 and 2015. The first tanker is expected at the end of the first quarter next year.

The terminal at the port of Swinoujscie will be able to accept 5 billion cubic meters of gas per year, with plans to expand it to 7.5 billion.

At full power, the terminal could handle around half of Poland's current annual gas usage.

Poland still relies on imports for roughly two thirds of its annual gas usage of around 16 billion cubic meters, mostly from Russia.

The gas to supply the new LNG plant will come from Qatar. Under the contract between Poland and Qatar it will be substantially more expensive than Russian gas. ($1 = 3.0799 Polish Zlotys)

By Anna Koper (C) Reuters 2014.