Poland agrees to buy gas from US for 20 years

American shale gas, which Gazprom declared impossible in 2013, continues to move into the European Market.

The Polish energy corporation PGNiG (Polskie Gornictwo Naftowe i Gazonictwo) announced that it has signed a long-term gas contract with the US.

The agreement with the American company Venture Global LNG is intended to last for 20 years, and will help the company to completely free itself from Russian gas, once its current contract with Russia expires in 2022, PGNiG CEO Piotr Woźniak said at a press conference.

According to him, the American gas is nearly 30% cheaper than the Russian. “I get that you are surprised, but that’s how we do business,” he added.

Each year, Poland will receive 2 million tons of liquefied natural gas (LNG) from the US, roughly 25 tankers per year, or 2.7 billion cubic meters of fuel after regasification.

The shipments will be done according to the Free on Board (FOB) principle, which means that the Polish company will own the resource the moment it is sent, and will determine the destination port itself.

The contract to purchase American LNG, which will cover roughly 20% of Poland’s demand, will improve Poland’s competitiveness in the energy sphere, said Polish Prime Minister Mateusz Morawiecki.

Poland’s ruling party between 2007-2015 wanted to sign a contract with Gazprom until 2037, the Prime Minister pointed out. “This would have been gas shackles and dependence on Russia for many years,” he observed, emphasizing that alternative suppliers and the development of Poland’s own gas extraction should reinforce the country’s sovereignty.

Poland requires 15 billion cubic meters of gas per year. Its own extraction meets one third of the demand, the rest is imported. The country’s primary supplier is the Russian company Gazprom, with which Poland has a contract to buy up to 10.2 billion cubic meters of gas per year.

This contract will “simply end” in 2022, and will not be extended, Woźniak said on Wednesday.

In addition to American LNG, the country also plans to purchase more gas from Norway, he noted.

Poland also buys LNG from Qatar, and intends to construct a gas pipeline called the Baltic Pipe which will connect it to the Norwegian shelf through Denmark.

  Poland, PGNiG, USA, Morawiecki