April 29, 2019 [S&P Global Platts] – Poland is planning to install an LNG floating storage and regasification unit (FSRU) in the Bay of Gdansk by 2024-25 to meet growing Polish and regional gas demand, Piotr Naimski, the government’s adviser on strategic energy infrastructure projects, said Wednesday.
Naimski was speaking during a signing ceremony for a Eur128 million ($143 million) grant to help finance the expansion of the existing 5 Bcm/year Swinoujscie LNG import terminal to 7.5 Bcm/year as Poland looks to wean itself of Russian pipeline gas imports.
Poland is diversifying its gas suppliers to end its decades-old dependence on Russian pipeline gas, with the new FSRU also set to give Poland the opportunity to become a gateway for gas supplies in the region in the middle of the next decade.
Warsaw estimates Polish gas demand will rise by up to 4 Bcm/year from around 18 Bcm this year to 21-22 Bcm in 2023-24.
The government plans to meet that demand by purchasing Norwegian gas through the 10 Bcm/year Baltic Pipe project, with an additional 4 Bcm/year set to come from domestic production and up to 7.5 Bcm/year of LNG supplies through the Swinoujscie terminal.
Naimski said Baltic Pipe and expanded LNG capacity would allow “so much gas to come to Poland and go through Poland that we could offer it also to our neighbors in the south, to Ukraine and also to Lithuania, because we will also be connected by gas pipeline to Lithuania.”
Poland’s state-controlled gas company PGNiG currently contracts up to 10.2 Bcm/year under the long-term Yamal contract with Gazprom, which expires in October 2022.
The take-or-pay clause in the contract obliges PGNiG to purchase about 85% of contracted gas volumes regardless of whether the company offtakes them or not. Polish officials have said PGNiG does not plan to renew the contract.
PGNIG has accused Gazprom of abusing its hitherto monopolistic supply position to overcharge it for gas and it has taken the Russian company to arbitration in Stockholm to try to win a lower rate.
Both Baltic Pipe and the Swinoujscie terminal expansion are part of the EU’s “Northern Gate” concept to build infrastructure to deliver energy from Northern Europe to the Adriatic Sea in the South.
“The extension of the Swinoujscie terminal will help diversify gas supply sources and improve the country’s energy security. This is a new example of the Energy Union in motion, supported by Cohesion Policy,” the EU Commissioner for Regional Policy Corina Cretu said in a statement.
The EU has already invested Eur250 million of cohesion funds into Swinoujscie, which began operations in mid-2016, and last week it awarded a Eur215 million grant for the construction of Baltic Pipe, which is scheduled to be completed in October 2022.
The operators of Swinoujscie, Polskie LNG, a wholly owned subsidiary of Gaz-System, have said they expect to select a contractor to carry out the terminal’s expansion later this year to enable the regasification capacity to be increased 50% by 2021 and the construction of a third storage tank by 2023.
The expansion program also includes the construction of a second jetty for loading/unloading LNG carriers, LNG transhipment and handling LNG bunker vessels as well as providing bunkering services. That part of the project will be built under a separate tender procedure.
The ceremony was also attended by Poland’s President, Prime Minister and Interior, Energy and Infrastructure ministers who said the investments would improve Polish energy security and allow Poland to become a regional gas supply hub.
Prime Minister Mateusz Morawiecki said the expanded LNG “capacity together with the Baltic pipeline and certain new elements of our infrastructure will give us the chance to be a serious player in this part of Europe.”
Morawiecki said the ceasing of Gazprom’s domination of Polish gas imports would result in lower prices for Polish households and business. “By avoiding the possibility of being put up against the wall [by a single supplier], we will have a good price, a lower price for all customers,” he said.
In 2018, PGNiG imported 2.71 Bcm of gas after regasification through Swinoujscie through its long-term supply contract with Qatargas and spot cargoes, and LNG accounted for 20% of total gas imports.
The company expects to grow its LNG portfolio to at least 7.75 Bcm/year after regasification by 2023 through the recent signing of supply contracts with US suppliers, Port Arthur LNG, Cheniere and Venture Global LNG. PGNiG has also signed a supply contract with the UK’s Centrica for US LNG.
In 2017, Poland’s gas transmission system operator, Gaz-System, commissioned ILF Consulting to carry out a feasibility study for a new FSRU with a capacity of between 4.1-8.2 Bcm/year to be located in the Bay of Gdansk.