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Gazprom’s European Influence Is Fading As Poland Sees First U.S. LNG Imports

LNG

European imports of U.S. LNG could significantly cut into Gazprom’s dominance on the European gas market, Poland’s minister in charge of strategic energy infrastructure Piotr Naimski said on Monday, just days before his country welcomes its first U.S. LNG cargo.

Poland, like many European countries, currently meets most of its gas demand with imports from Russia’s gas giant, which says that its share of Europe’s gas consumption grew to a record high of 34 percent in 2016.

Due to increased production and export capacities LNG has become a global product. If appropriate decisions are taken, then Gazprom could be excluded or blatantly reduced when it comes to its supplies to Europe,” Naimski said at an LNG industry conference today, as quoted by Reuters.

Commenting on the different pricing for natural gas in the U.S. and Europe, Naimski said:

“The price offered in future contracts by potential U.S. exporters is linked to the Henry Hub in the U.S., and not, for example, to the London market. This is a problem for Europe - it means that to balance the price with the European one, the U.S. exporters would have to cover the transport costs.”

Poland is trying to diversify its gas supplies, and its company Polish Oil & Gas Company (PGNiG) has a strategic agreement with Qatargas for LNG supplies.

Poland will soon receive the first U.S. LNG cargo to a country from Central and Eastern Europe—Cheniere Energy is expected to deliver the cargo in the first half of June, under a deal with PGNiG.

In another first, the first ever U.S. LNG cargo to Northwest Europe, the Arctic Discoverer tanker set sail from Sabine Pass in the U.S. on May 21, and is expected to arrive at the Rotterdam terminal Gates on June 7.

According to the EIA, the U.S. is set to become a net exporter of natural gas on an average annual basis by 2018, due to declining pipeline imports, growing pipeline exports, and increasing LNG exports. By 2021, four LNG export facilities that are currently under construction are set to be completed.

By Tsvetana Paraskova for Oilprice.com

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  • M B Kent on May 30 2017 said:
    In a business transaction - price is certainly important, but transient. Trust and integrity are paramount, and earned from a lasting relationship.
  • Naomi on May 30 2017 said:
    The occasional purchase of USA LNG @ $4/mmcf keeps the Gazprom price at $3.50/mmcf. The USA Gulf has more gas than Russia, and no exploration required. US banks continue low sunk cost finance of LNG terminals and shipping until Russia abandons Ukraine and Crimea. President Obama licensed a hundred prospective LNG terminals with capacity to supply all of Europe. East Ukraine and Crimea are scorched Earth. Russians are hungry. Putin is begging for investment donations. What a tangled web we weave when first we practice invasion of NATO.
  • Chris77 on May 30 2017 said:
    "{Gazprom's} share of Europe’s gas consumption grew to a record high of 34 percent in 2016."

    In which amount the Russian gas, received by Belarus as a friendly subsidy from Russia and sold by Belarus, not Russia to Europe, is not included. If included, the Russian share in Europe's gas consumption will be above 40%.

    Let me not comment the fantastic Polish dreams of being supplied by American LNG. That gas needs ""just" to be cooled, compressed, liquified, carried over the Ocean, then gasified again, and - voilá! - they have the same gas as from Russia, just the price will be twice, three times as much...

    ha ha ha
  • Pampita on May 29 2017 said:
    Let's be serious two seconds, ok ?
    Because russophobic Poland have a knee-jerk reaction and buy a small and costly amount of US gas doesn't mean Gazprom is fading...
    US shale gas is twice the price of Russian gas, the reserves are fading and the transportation takes a long time. No grown up European government will ever massively buy US shale gas.

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