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Poland, dependent on Russian gas, touts 1st US LNG cargo as 'turning point'


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Poland, dependent on Russian gas, touts 1st US LNG cargo as 'turning point'

Poland is set to receive its first cargo of U.S. LNG, a "turning point" in the country's move to lessen its dependence on Russian gas, Polish officials said in Washington, D.C.

Proponents of U.S. LNG exports have promoted shipments across the Atlantic as a way to diversify Europe's gas supply away from Russia's state-owned Gazprom since before Cheniere Energy Inc. stepped onto the scene with its Sabine Pass LNG export terminal in Louisiana. From February 2016 to March 2017, the equivalent of 27 Bcf of U.S. gas from the terminal landed in Italy, Spain and Portugal. Poland expects to receive its first cargo June 8, and another shipment is on its way to the Netherlands.

Piotr Naimski, a Polish government official who leads the prime minister's energy infrastructure initiative, said the Kaczynski LNG terminal is an important part of Poland's energy diversification strategy and receiving the first cargo of U.S. LNG is a "milestone" for the country. "We are almost 100% dependent on gas imports from Gazprom," Naimski said at a June 7 event in Washington hosted by the Atlantic Council. "I believe that now we are on the verge of success. It's a turning point."

But while bringing the fruits of the U.S. shale boom to European allies is a talking point in Washington, the market for U.S. LNG to Europe has been debated. Low gas prices overseas incentivize European countries to look closer to home, and Gazprom has indicated that it will cut prices to maintain market share. Countries including Poland and Lithuania have built infrastructure to receive LNG, though many have wondered whether the import facilities will serve more as leverage to negotiate lower prices with Russia.

Piotr Wozniak, president of the management board of the state-run Polish Oil & Gas Co., or PGNiG, said the company did not have to pay a premium for the cargo headed to Poland. He credited the deal to PGNiG's marketing arm, which opened an office in London in February. "If we can, we behave as a competitive company," Wozniak said. "It's business. There are no guarantees."

After the cargoes land in Poland and the Netherlands, Cheniere will have sent LNG to about two dozen countries, according to Robert Fee, acting senior vice president at Cheniere and the chief of staff to CEO Jack Fusco. "Five years ago, we were talking about how to get U.S. LNG to Europe, and now it's happening," he said. "It really is an exciting time."