Polish Incumbent Buys US LNG from Centrica

Polish incumbent PGNiG has signed a five-year contract with Centrica to buy LNG sourced from the US on a delivery ex ship basis. It will start next year, it said in a statement November 21 and be priced against the gas market.

Up to nine cargoes will be delivered during the term of contract to the terminal in Swinoujscie, where PGNiG recently booked additional regasification capacity. The primary source of LNG delivered under this contract will be the Cheniere-operated liquefaction terminal at Sabine Pass, Louisiana, it said. A company spokesperson confirmed the volume and the time-frame, meaning just under two cargoes/year at most.

This is the first medium-term LNG agreement signed by PGNiG Supply & Trading’s branch office in London, which is dedicated to global LNG trading. The agreement follows through on PGNiG’s strategy of securing reliable and diversified gas supplies for Poland and its growing trading capability in the European market. It is also the first mid-term contract for LNG from the US delivery to central and eastern Europe. In October this year, PGNiG also took part in a binding open season procedure for capacity bookings from the planned 10bn m³/y pipeline corridor (Baltic Pipe), which will connect the Norwegian Continental Shelf with Poland in 2022.

“Preceded by the long term contract for LNG deliveries from Qatar and several spot deliveries in 2017, this agreement shows that we are stepping into a new level of global LNG market activity. This five-year agreement for American LNG deliveries is based on gas market conditions. We look forward to working with Centrica as a partner to continue to provide diversified supply into Poland,” said PGNiG CEO Piotr Wozniak, adding it was the first of its kind in PGNiG’s planned portfolio of medium-term LNG agreements. Most of these LNG supply agreements will be dedicated to the gas markets of Poland and other central European countries in order to increase the energy security of this region, which has historically been dominated by Russian gas."

Centrica's energy marketing and trading boss Jonathan Westby said the deal was part of Centrica's strategy to build its global LNG portfolio. "Our reliability, experience and trading capabilities mean we are well placed to deliver LNG into an ever growing number of markets around the world," he said.

Update November 22: The US embassy in Warsaw added: "We welcome today’s announcement of an agreement between PGNiG and Centrica to export U.S. LNG to Poland – an ally and friend – over the next five years, a sign of our continued strengthening of commercial and energy security ties."