PGNiG and ERU sign LNG agreement

Polish Oil and Gas Co. (PGNiG) has purchased a cargo of LNG from the US, and then – following regasification – sold the natural gas to Energy Resources of Ukraine (ERU).

The contracted LNG tanker will arrive at the President Lech Kaczynski LNG Terminal in Swinoujscie at the beginning of November. LNG will be injected into the Polish transmission system after regasification, from where it will reach Ukraine and ERU via the gas connection in Hermanowice. Supplies to the Ukrainian partner will be carried out until the end of 2019.

“PGNiG has built up extensive competences on the LNG market over the past three years. We have the opportunity to purchase LNG on competitive terms from reliable suppliers from around the world. We also have reserved full capacity at the terminal in Swinoujscie – we expect 39 deliveries next year – and have the available capacity in the gas pipeline system in Poland and on its borders. This makes PGNiG a natural partner for cooperation in building a modern and secure gas market in our part of Europe. Several years of cooperation with our partners from the Ukrainian ERU is the best proof of this,” commented Piotr Wozniak, President of the PGNiG Management Board.

“Currently, the only limitation in the development of exports to Ukraine on an even larger scale is the capacity of gas pipelines in Poland in the direction of Silesia–Podkarpacie. We expect the capacity of these gas pipelines to be expanded by 2021 at the latest,” added Mr Wozniak.

Imports of LNG to Poland are growing dynamically. While in 2016 LNG accounted for about 8.5% in the entire import structure, in 2018 it was over 20%. Since the commencement of the terminal in Swinoujscie, PGNiG has already received nearly 70 LNG loads with a total volume of approximately 7.5 billion m3 after regasification. More and more supplies are coming to Poland from the US. While in 2018 PGNiG welcomed one spot delivery of US LNG, by the end of August 2019 it has already received four spot deliveries, and also one under a medium-term contract and one under a long-term contract.

“We continue to maintain our reputation as pioneers in the implementation of the most ambitious tasks in the regional energy sector. Thanks to the partnership with our Polish companion, we are making tangible breakthroughs in building a transatlantic gas supply corridor from the US to Ukraine,” said Dale Perry, President of ERU Corp., commenting on this deal.

“We contracted this volume for the purpose of injecting and storing it for further delivery to consumers in the winter season – this way we contribute to the country’s energy safety during uncertain and especially risky winter period 2019 – 2020,” said Yaroslav Mudryy, Director of the ERU TRADING LLC. “In this case, taking to the account well developed gas transportation system, Ukraine may not be the last destination for American LNG, it can be successfully delivered to countries like Hungary, Romania and even Moldova,” he added.

PGNiG and ERU have been cooperating for several years. In August 2016, PGNiG started exporting gas to Ukraine, where the recipient was the Ukrainian trading partner. In the past, both companies also jointly supplied natural gas for the needs of Ukrtransgaz – Ukrainian operator of transmission network and storage system.

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