Sector: LNG

LNG in Poland and Europe - historic moment

On June 20, 2016, conference LNG in Poland and Europe: A New Model of the Gas Market took place in Warsaw. The event occured at a historic moment – three days earlier a Qatari LNG tanker delivered the first batch of liquefied methane to the newly launched terminal in Świnoujście.
Piotr Naimski© gazeo.comPiotr Naimski

The delivery by ship means that once the LNG is vapourised and enters the Polish gas grid, for the first time in the country's history natural gas other than imported from Russia will be used by households and industrial customers. This is a major step towards energy supply diversification and independence, as highlighted by Piotr Naimski, a governmental proxy for strategic energy infrastructure.

Aside from the LNG Terminal, which is already operative, the Baltic Pipe natural gas pipeline is planned to connect Poland and Norway via Denmark. A sustainability study is underway, with a decision expected toward the end of 2016 or in early 2017. Combined, the facilities will enable import of 20 billion cubic metres of the blue fuel annually. Thanks to the infrastructural investments (the terminal and the pipeline) Poland may become a transitory agent in natural gas supplies to Southern and Eastern Europe.

Constructing and expanding the LNG terminal and making a pipeline connection with the Norwegian Shelf, are mutually complimentary. If the plan comes to fruition, we're going to face a huge chance or actually a plan of making Poland a natural gas hub to serve not only our country, but also Central Europe.

When we speak of energy safety and supply safety, we actually speak of our country's safety. If we see the issue this way, we seek ways to diversify supply sources.

Piotr Naimski

Michał Kurtyka© gazeo.comMichał Kurtyka

Michał Kurtyka, undersecretary of state in the Ministry for Energy, delivered a speech regarding changes the global LNG market is about to undergo and the impact of those on the Polish and European natural gas market. The European Union is the largest consumer of natural gas in the world, with a stable annual consumption of 400 billion cubic metres. Right now, only approx. 10 percent of natural gas imported into the EU comes in the form of LNG, which means the 25 large-scale LNG terminal across United Europe are only used in 24 percent of their collective capacity.

LNG oversupply in the world is expected to grow considerably in the years to come. It is estimated that liquefaction capacity of the export infrastructure around the globe will rise by 40 percent, mainly due to investments in Australia and the US. The producer-oriented LNG market is slowly transforming into a consumer-oriented one, which is bound to drive prices of the product down remarkably.

Maciej Woźniak© gazeo.comMaciej Woźniak

Maciej Woźniak and Henryk Mucha, both representing PGNiG, the Polish national natural gas provider, presented plans regarding the company's growth and development, including infrastructure for vehicle refueling. According to EU regulations, it is required that CNG stations be located every 150 km and LNG stations every 400 km along major transport corridors. This means 24 LNG stations will be constructed and launched along A1 and A2 motorways by the year 2025.

Plans for retailing of LNG as road transport fuel state 2018 as the starting date. In that year, 2 million cubic metres of fuel are expected to be sold. Sustained growth of market and infrastructure should make it possible to retail as much as 70 million cubic metres of LNG for road transport alone in 2025. Additionally, a ship bunkering facility is planned at one of Polish sea ports and eventually PGNiG intends to purchase a specialised ship from which LNG will be transfered to other vessels.

Paweł Jakubowski of Gaz System spoke in detail about the plans to boost natural gas import capacity from the northern direction. If they come to fruition, up to 20 billion cubic metres of methane could be sourced from that corridor, including 10 billion from the expanded LNG Terminal in Świnoujście and another 10 billion from the proposed Baltic Pipe pipeline. Alternatively, the LNG Terminal (also expanded beyond its current capacity) could be enhanced with a „floating” LNG terminal (FSRU) in the Gdansk Bay. Either way, Polish import capacity should reach 20 billion cubic metres, which is approx. 5 billion cubic metres beyond Poland's internal consumption. The oversupply could be transferred deeper into the continent.

Paweł Jakubowski© gazeo.comPaweł Jakubowski

Apart from regasification, the LNG Terminal in Świnoujście allows to transfer of up to 95 thousand cubic metres of LNG annually onto tanker trucks. As the terminal develops and expands, it will  facilitate loading LNG onto rail tankers and smaller vessels (from supply tankers) as well as ship bunkering.

The second session of the conference revolved around international markets (European and global). A representative of Statoil, Peder Bjorland, spoke to highlight the importance of LNG in the company's strategy. In fact, it is Statoil that will deliver the second commercial batch of LNG to the terminal in Świnoujście. Mr. Bjorland continued to demonstrate Statoil's natural gas mining potential, which is only partially used at the moment. According to the speaker, the company will continue to mine natural gas successfully for decades to come.

Fred Hutchinson© gazeo.comFred Hutchinson

LNG industry veteran Fred Hutchinson, managing director of LNG Allies from the US, detailed the natural gas revolution that occured across the Atlantic when mining from the shale gas resources began. According to Mr. Hutchinson, shale gas resources will be effective for many years, allowing the US to maintain their current status of LNG-importer-gone-exporter and major player on the global LNG market.

Aurimas Martisaukas of the LNG terminal in Klaipeda, Lithuania, presented his company's plans (the terminal is a floating one) and their impact on the price of natural gas delivered to the country. Of all EU countries, Lithuania was the one paying the highest price for natural gas. With the terminal operative, prices have dropped considerably.

The LNG in Poland and Europe conference was yet another natural-gas-oriented event held by Adventure Consulting, aimed at preseting in detail the key issues concerning the LNG market in Poland in the broader context of the fuel's global situation. Clearly, the Polish market has made a quantum leap with the launch of the terminal in Świnoujście, whose development, along with the planned construction of the Baltic Pipe pipeline, will allow the country to become completely independent of Russia in terms of natural gas supplies. This means Poland will have a much stronger negotiating position with Gazprom, hopefully leading to lowering the prices of blue fuel delivered from across the Eastern border.


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Piotr Złoty
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