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Poland's PGNiG signs 24-year LNG supply deal with Cheniere


Cheniere to supply around 40 Bcm of gas

Deliveries to start in 2019

Poland seeking to diversify away from Russian gas

Warsaw — Poland's dominant natural gas producer and distributor PGNiG said Thursday it has signed a 24-year LNG supply deal with Cheniere Marketing International for around 40 Bcm of gas deliveries as it continues efforts to diversify away from Russian gas.

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"The agreed conditions, including the competitive price, are fully satisfactory for PGNiG. Thanks to this agreement we will have regular supplies of LNG from the USA starting as early as 2019," PGNiG CEO Piotr Wozniak said in a statement. "The share of LNG in our import portfolio is constantly increasing. The world's liquefied natural gas market is rapidly growing and allows us to select the best offers in this area."

PGNiG did not say how much the contract was valued at.

The company said Cheniere would deliver 0.52 million mt of LNG, approximately 0.7 Bcm of gas after regasification, during 2019-2022.

Subsequently, in 2023-2042, total imports from Cheniere would reach 29 million mt of LNG, or 39 Bcm of gas, which amounts to about 1.45 million mt of LNG or 1.95 Bcm of gas annually, PGNiG said.

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Cheniere will deliver the cargoes from its terminals in Sabine Pass, Louisiana and Corpus Cristi, Texas on a delivered ex-ship basis to Poland's 5 Bcm/year Swinoujscie terminal.

"PGNIG is an important partner for Cheniere in a growing part of the European market, and we look forward to our long-term relationship providing PGNiG with clean, secure and flexible LNG," Cheniere CEO Jack Fusco said.

The deal is part of PGNiG's efforts to diversify away from Russian pipeline gas. Gazprom supplies PGNiG with up to 10.2 Bcm/year of gas in a deal that is due to expire in 2022.

PGNiG has said that Gazprom takes advantage of the limited gas supply options in Central and Eastern Europe to overcharge its customers in the region. PGNiG officials have said they do not intend to extend the Gazprom contract although they do not rule out buying Russian gas post 2022 if it is offered at a competitive price.

PGNiG is planning to replace Gazprom's volumes with increased LNG supplies -- the Swinoujscie terminal plans to increase its import capacity to 7.5 Bcm/year by 2022 -- as well as building the planned 10 Bcm/year Baltic Pipe project to connect the Norwegian, Danish and Polish gas networks to directly import Norwegian gas. An investment decision for Baltic Pipe is expected this year to facilitate construction by the end of October 2022.

PGNiG currently imports 2.9 Bcm/year of gas through Swinoujscie under its 20-year supply deal with Qatargas. In November last year, PGNiG signed a five-year LNG supply deal with Centrica for nine cargoes sourced from the US. Last month, PGNiG signed a 20-year LNG supply deal with Venture Global in the US for 2.7 Bcm/year of gas, with deliveries starting in 2022-23. PGNiG is planning to resell some of the volumes as it seeks to build Poland's position as a gas hub for the region.

Wozniak said PGNiG plans to sign another two LNG supply deals to further build its portfolio.

"We will sign different contracts for LNG with US companies, they all have one thing in common, they are 20%-30% cheaper than the currently purchased gas from Russia," Wozniak told a news conference Thursday.

The US secretary for energy, Rick Perry, who is visiting several countries in the region and is in Poland Thursday to sign an energy cooperation deal, said the Cheniere agreement pointed the way for other European countries seeking to diversify their energy supplies.

"This is a signal for the whole of Europe. In this way you can develop Europe's future and energy security and diversify energy sources. This is a great day for Europe," he said.

--Adam Easton,

--Edited by James Leech,