Poland to sell Ukraine American liquefied natural gas

By the end of 2019, the Polish company PGNiG intends to start supplying Ukraine with natural gas obtained from the regasification of liquefied natural gas (LNG) shipped to Poland from the US. This will be a “real breakthrough” in the creation of a “transatlantic gas supply corridor from the US to Ukraine,” said Dale Perry, president of the company Energy Resources of Ukraine (ERU).

According to Yaroslav Mudriy, director of ERU Trading, the gas bought from PGNiG will be kept in underground reservoirs for later use by consumers during the winter period. “In this way we are making our contribution to the country’s energy independence during the particularly risky 2019-2020 winter season,” Mudriy explained.

PGNiG receives LNG from the US through the Lech Kaczyński terminal in Świnoujście, on the coast of the Baltic Sea. From there, the gas will be transported in gaseous form through the gas pipeline system.

“We have available capacity in the gas pipeline in Poland and on its borders. At present, the only limitation for increasing exports to Ukraine is the capacity of Poland’s gas pipelines towards Silesia – Outer Subcarpathia. We expect that the capacity of these gas pipelines will be increased no later than 2021,” explained PGNiG head Piotr Woźniak in a company notice.

According to Woźniak, PGNiG can buy LNG on competitive terms and from reliable suppliers from around the world, and expects to receive 39 gas carrier ships at the terminal in Świnoujście in 2020.

Mudriy said that in future, regasified American LNG could be exported to Hungary, Romania and Moldova.

Roman Matsaev, owner of Lombi Gas Marketing & Trading, explained to RBC that the price of the gas transported from Poland to Ukraine will depend on trades made on the German Gaspool exchange, since the Polish market is focused on this platform.

“At present, the cost of American LNG at European ports is in the region of €7-7.5 per megawatt hour, plus expenses for regasification and insertion into the gas transport system. In the case of supply from Poland, a fee for exiting the Polish system is also charged, which could reach up to 2.5-3 €/MWh in total. In the winter period, the price will have to be adjusted upwards, based on the seasonality factor, as well as relations between Russian Gazprom and Naftogaz of Ukraine,” Matsaev explained.

  Poland, PGNiG, Ukraine, LNG