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Poland Could Become Gas Trading Hub

PGNiG

By Reuters 2016-03-21 22:09:49

A new LNG terminal and a planned pipeline to Norway will help Poland to reduce its reliance on Russian supplies and boost its goal of becoming a regional gas trading hub, government and utility officials said on Monday.

Poland, which for more than four decades was part of the Moscow-led Soviet bloc, imports most of the gas it consumers from Russia. But it has been looking for years to diversify sources of supply, not least because of the unease created by Russia's interference in neighboring Ukraine.

Poland has finished construction of a three billion zlotys ($794 million) LNG terminal by the Baltic Sea, which is expected to receive its first commercial shipments in July.

Late last year, state-controlled utility PGNiG also revived plans to build a pipeline by 2022 to carry gas from Norway.

"Thanks to the terminal and the Norway link this big dream of Poland becoming a gas hub could materialize," PGNiG deputy head Janusz Kowalski told a gas conference.

While a Polish gas trading hub is at least a few years off, analysts say shared borders with seven nations and a long Baltic coast provide an ideal location for connections to E.U. markets to the south and west, as well as Baltic and Nordic countries.

Success will depend on attracting high volumes of gas, which Poland hopes the Norwegian link and LNG terminal will provide.

So far, one supply contract has been agreed for the terminal - for Qatargas to supply PGNiG. The deal assumes gas deliveries of 1.5 billion cubic meters (bcm) annually via the terminal for 20 years starting from 2014 when the facility was initially set to open.

But Poland could also buy LNG from the United States, with the terminal's capacity seen potentially expanding to 10 billion bcm from five bcm currently, government energy official Piotr Naimski said.

"We need two if not three sources of gas supplies," Naimski told the conference. "The LNG terminal is not enough and that is why we should gain access to another source, which is the pipeline to Norway. The government has decided that the project should be developed."

Gas grid operators in Poland, Denmark and Norway have all said they have started analyzing the pipeline plan.

PGNiG's Kowalski said his company might consider further acquisitions in Norway that could boost the company's production in the North Sea to around three bcm of gas by 2022.

($1 = 3.7774 zlotys)