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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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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.