In an effort to curb Russian influence on European energy supplies, the state-owned Polish Oil & Gas Co. (PGNiG) signed a five-year contract for liquefied natural gas (LNG) sources from Cheniere Energy Inc.'s Sabine Pass terminal in Louisiana, with a British company making the cargo deliveries.
Beginning in 2018, UK-based Centrica plc will deliver up to nine cargoes of LNG over the term of the contract to the President Lech Kaczynski LNG Terminal in Swinoujscie, Poland, where PGNiG recently booked additional regasification capacity. The Polish company said the contract was the first medium-term LNG agreement to be signed by its supply and trading branch office in London, and the first such contract for LNG sourced in the United States for delivery to central and eastern Europe.
"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," said PGNiG CEO Piotr Wozniak. "This five-year agreement for American LNG deliveries is based on gas market conditions...
"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."
That sentiment was shared by U.S. Sen. Bill Cassidy (R-LA), a member of the Senate Energy and Natural Resources Committee.
"This is great news for Louisiana's natural gas workers," Cassidy said Tuesday. "Not only will our state be exporting American energy to Poland, an important ally of the U.S., but it will also be playing an important role in reducing Russian President Vladimir Putin's ability to bully Europe."
The Swinoujscie terminal received its first commissioning cargo from Qatargas in late 2015. The delivery marked Poland's first shipment of gas from the Middle East. At the time, Poland's treasury ministry said the country had signed a 20-year supply agreement with Qatar. The first commercial cargo, also from Qatar, arrived in June 2016.
Last April, PGNiG struck a deal for a spot cargo of LNG from Cheniere's Sabine Pass. It was the company's second spot delivery; the first came from Norway in June 2016. During a European energy summit in Warsaw last July, President Trump congratulated the Polish government for receiving the LNG cargo and urged other European nations to look to the U.S. as a source for energy supplies.
PGNiG added that last month, it participated in a binding open season for the proposed Baltic Pipe natural gas pipeline, which would transport supplies from Norway to Poland via Denmark. The 140-mile, 967 MMcf/d pipeline is expected to enter service in 2022.
Other European energy projects that could thwart Russian influence include the Gas Interconnector Greece-Bulgaria, a 32-inch diameter, 182-kilometer (113-mile) pipeline with 3-5 billion cubic meters (105.9-176.6 Bcf) of transportation capacity; and LNG Croatia LLC's floating LNG import terminal on the Croatian island of Krk, which would have 2 billion cubic meters (70.6 Bcf) of import capacity.
Cheniere, the first company to export LNG from the Lower 48, achieved first production via the fourth train of its six-train fleet at Sabine Pass last summer. Commissioning cargoes have boosted deliveries to more than 3 Bcf/d. Cheniere management said the company is on track for that cargo to see a date of first commercial delivery in the first half of 2018.
For the first five LNG trains at Sabine Pass, 19.75 of the 22.5 million metric tons/year of nominal production capacity (about 88%) has been contracted to third party, foundation customers on a long-term free-on-board basis under sale and purchase agreements (SPA). Foundation customers include Royal Dutch Shell plc, Gas Natural Fenosa, Korea Gas Corp., Gail (India) Ltd., Total SA and Centrica. Any excess capacity not sold under long-term SPAs to foundation customers is available for Cheniere marketing.
During an earnings call to discuss 3Q2017, CEO Jack Fusco said the company exported a total of 44 LNG cargoes from Sabine Pass during the quarter. A total of 144 TBtu of LNG was loaded during the quarter, including 18 TBtu of commissioning cargoes. To date, a total of 200 LNG cargoes have been exported from Sabine Pass to 25 of the world's 40 importing countries.