Poland Deepens Alliance with US LNG Exporters

Poland's energy company PGNIG has entered into a heads of agreement (HOA) with US-based Sempra for the purchase of 3 million tons per year of LNG from Sempra's North American LNG project portfolio.

The HOA sets the stage for negotiation and finalization of definitive 20-year LNG sale-and-purchase agreements for 2 million tons/yr from the proposed Cameron LNG Phase 2 project under development in Louisiana, and 1 million tons/yr from the proposed Port Arthur LNG project under construction in Texas.

PGNIG would have the opportunity in 2022 to reallocate volumes from the Cameron LNG Phase 2 project to Port Arthur LNG.

Initial deliveries are expected to start in 2027 based on an f.o.b. formula, meaning the buyer, PGNIG, would be responsible for shipping.

Poland has begun chartering vessels and building its own fleet to handle such shipping requirements, and this week marked the first LNG cargo delivery to Poland via a PGNIG-chartered tanker.

Sempra Infrastructure and PGNIG also expect to continue working toward a framework for the reduction, mitigation and reporting of greenhouse gas emissions across the LNG value chain.

PGNIG already has long-standing LNG offtake deals with US-based Venture Global and Qatar.

The Motive

Poland, with a centuries-old history of being the target of invasions, has been working toward independence from Russian gas since before its Swinoujscie LNG import terminal opened in 2015.

That effort to reach gas independence is expected to culminate by year-end 2022 through LNG purchases and major pipeline links to Norway and to Lithuania.

But even those plans may need to be accelerated after Poland and Bulgaria were cut off from Russian gas earlier this month after refusing to bow to Kremlin demands that they pay in rubles.

"LNG is already one of the cornerstones of our diversified strategy to enhance Polish energy security, as well as to strengthen the commercial potential of the PGNIG Group. We are determined to further expand our operations in this direction and are therefore taking steps to secure access to adequate natural gas volumes in the future," said Iwona Waksmundzka-Olejniczak, PGNIG's president.

Sempra, for its part, is aiming for a 30 million ton/yr US export portfolio as it rides the fresh tidal wave of interest in US LNG.

Sempra's LNG Export Projects

Sempra Infrastructure, the unit that includes its LNG assets, is developing Cameron LNG Phase 2, which is expected to include a single train with a maximum production capacity of approximately 6.75 million tons/yr of LNG. On top of that, about 1 million tons is expected through debottlenecking the existing three LNG trains at the facility in Hackberry, Louisiana.

Last month, Sempra Infrastructure signed an HOA with the Cameron LNG partners for the development of Phase 2.

Sempra Infrastructure is also developing the Port Arthur project, a 13.5 million ton/yr, fully permitted facility on a 3,000-acre site in Jefferson County, Texas.

The new PGNIG HOA marks a restart in offtake interest for Port Arthur after PGNIG pulled the plug on a 2 million ton/yr deal back in July of last year.

Port Arthur quickly moved back to Sempra's front burner after Russia invaded Ukraine in February.

PGNIG's LNG Import Projects

PGNIG has reserved the full regasification capacity of the 3.7 million ton/yr LNG import terminal in Swinoujscie, Poland, which is in the process of being expanded to about 6 million tons/yr.

PGNIG also booked capacity at the 2.9 million ton/yr LNG import terminal in Klaipeda, Lithuania, and received its first shipment via Lithuania earlier this month.

Beyond the Swinoujscie terminal, PGNIG is developing a 4.4 million ton/yr floating regasification terminal in the Gulf of Gdansk.