The Biden administration has agreed to provide $500 million in guarantees for Poland’s PKN Orlen SA to provide more domestic LNG for European countries working to replace Russian natural gas.

The U.S. International Development Finance Corp. (DFC) board approved a plan to back the Polish utility’s hedges for liquefied natural gas with a European unit of Goldman Sachs. The plan would “facilitate higher volumes of U.S. LNG imports” to Poland, according to DFC’s draft statement.

“The project is expected to have a positive but limited development impact in Poland by helping to address the country’s growing demand for natural gas after Russia, which accounted for approximately 55% of Poland’s gas imports and 42% of total gas supply, halted gas exports to the...