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US, Poland reach nuclear technology deal to loosen Russian pipeline gas grip

Highlights

Six reactors to complement growing LNG imports

$18 billion spending plan for services, equipment

Houston — Poland has agreed to spend $18 billion on US nuclear technology and services to help it break its reliance on Russian pipeline gas for use in generating electricity, Energy Secretary Dan Brouillette said Oct. 19.

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The binding deal is part of a larger fuel diversification initiative Poland has taken in recent years that includes boosting imports of US LNG.

The financial commitment is tied to nuclear technology and engineering services from US companies such as Westinghouse, Bechtel and Southern Company and will cover almost half of the $40 billion that Poland plans to spend on at least six nuclear reactors each with a capacity of at least 1 GW, Brouillette said. Bechtel is also a major global builder of liquefaction facilities.

"The diversity of energy sources, the diversity of supplies, is very important, not only to Poland, but to the rest of Europe," the US secretary said. "This is just the next step in Poland achieving what they said they wanted -- energy independence, economic independence."

The Polish government recently approved an updated nuclear energy program, which targets the construction of between 6 GW and 9 GW of generation III or III+ pressurized water reactor capacity by 2043.

Poland expects to build two plants, each with three 1 GW+ PWRs, in Lubiatow-Kopalino and Zarnowiec, near the country's Baltic Sea coast. The first unit is scheduled to be commissioned in 2033, with each subsequent block to follow every two years.

The program also sees the Polish state creating a special purpose vehicle to take over responsibility for the investment from the country's largest utility PGE. Recently, PGE signed a letter of intent to sell PGE EJ1, its subsidiary that is leading site location and permitting preparations for the project, to the state Treasury.

Poland plans to choose a partner next year that will take up to a 49% stake in the investment, as well as provide the technology for all the reactors. An agreement between the special purpose vehicle and partner is scheduled to be signed in 2022.

In June, President Donald Trump said the US and Polish governments were close to signing a cooperation agreement to develop Poland's first nuclear plants. He said at the time that Poland was planning to buy the technology from a large US provider.

During a conference call with a small group of reporters, Brouillette said the US had just signed the agreement Oct. 19.

The nuclear work the US companies will do, including front-end engineering design studies and supplying equipment, complements agreements in recent years for Poland to buy LNG from US Gulf Coast liquefaction facilities, Brouillette said.

Poland's PGNiG has offtake agreements with several US LNG developers and exporters, including Cheniere Energy and Venture Global LNG. Sempra Energy has said it continues to talk to PGNiG about finalizing a 2 million mt/year sales and purchase agreement signed in December 2018 that would be tied to Sempra's proposed Port Arthur LNG project in Texas.