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Highlights

MOU commits two countries to regular meetings

Some in European bloc want to reduce reliance on Russian gas

Warsaw — US and Polish officials will meet in Washington early next year for the first round of discussions as part of a new strategic initiative that includes encouraging Europe to further diversify its energy infrastructure by, among other things, boosting LNG imports, Energy Secretary Rick Perry said Friday.

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The comments in Warsaw came as officials from both countries signed a memorandum of understanding regarding the strategic plan.

Poland is looking to reduce its dependence on Russian pipeline gas in part by increasing imports of LNG, and it has increasingly been looking to Qatar and the US to provide the supply. Last month, Polish Oil & Gas finalized a purchase and sale agreement with Venture Global, which has proposed two LNG export terminals in Louisiana. The state-owned company announced an offtake deal Thursday with Cheniere Energy.

"We look forward to sending many more shipments of LNG here to Poland and supporting your efforts to diversify your LNG supply," Perry said in prepared remarks announcing the strategic dialogue between the two countries.

Perry said the US and Poland would enhance cooperation on energy security, support expanded efforts to enhance energy cooperation and diversification - including nuclear energy - and continue to coordinate efforts to counter energy projects that threaten the countries' mutual security.

"We believe this sends a clear signal ... one that emphasizes the importance of diversity in our nations' energy security policies," Perry said. "This means a diversity of supply, a diversity of countries providing that supply, and a diversity of routes for delivering that supply."

The Trump administration has been a vocal critic of Gazprom's Nord Stream II gas pipeline project that would run across the Baltic Sea to connect Russia and Germany. Some countries in the region, including Ukraine, have lobbied hard against the project because it would allow an additional 5.3 Bcf/d of gas flows to bypass them, and they currently rely on lucrative transit fees to move Russian gas across their borders.

Also, import prices would likely go up for these countries, as the marginal source of gas would have to come from Western European spot markets at higher prices given the greater Russian flexibility to go around them, S&P Global Platts Analytics data showed.

Germany, a key US ally in the region, supports the project.

In July, a bill was introduced by Republican US Senator John Barrasso of Wyoming that would impose mandatory sanctions on Nord Stream II and expedite the export of US natural gas to NATO allies.

Demand for gas in European Union countries has increased as the bloc aggressively pursues clean air policies, which means less use of coal for power production. Russia has been a major source of gas supply to the region for decades, though in recent years some countries have expressed a desire for alternatives.

PIPELINE POLITICS

The MOU signed by Perry and Poland's strategic energy infrastructure adviser, Piotr Naimski, commits the countries to convene regularly scheduled working sessions, at least two times per year, to be held in either country.

At a news conference following the signing, Naimski said the Polish and Danish gas transmission system operators, Gaz-System and Energinet, plan to sign at the turn of November and December a construction agreement for the Baltic Pipe project that would connect the Polish, Danish and Norwegian gas networks and allow Poland to directly import Norwegian gas to replace the Russian gas it currently purchases.

That agreement does not constitute a final investment decision, but he said everything remains on track to begin construction in 2020 in order to complete the project by October 2022, when Polish Oil & Gas' long-term contract with Gazprom expires.

(Updates throughout with details, market analysis, background, quotes)

-- Harry Weber and Adam Easton, newsdesk@spglobal.com

-- Edited by Annie Siebert, newsdesk@spglobal.com