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Oil Should Stay In Triple Digits: Analyst

Poland Turns Back on Russia In Favor Of US LNG In 20-Yr Deal

Poland’s main gas firm PGNiG has signed a 20-year agreement with U.S. Venture Global LNG, under which the Polish energy firm will receive 2 million tons of U.S. liquefied natural gas (LNG) every year beginning in 2022, in what is the latest move by Poland to reduce its reliance on Russian gas and oil imports.

Poland is paying around a quarter less for U.S. LNG than it does for Russian gas, PGNiG chief executive Piotr Wozniak told a news conference on Wednesday. PGNiG expects to sign at least one more long-term deal to buy LNG for Poland, the company’s deputy chief executive Maciej Wozniak noted.

Under the deal with Venture Global LNG, PGNiG will buy LNG on a free on board (FOB) basis starting from the commercial operation date of the Venture Global Calcasieu Pass LNG export facility, currently expected in 2022, and the commercial operation date of the Venture Global Plaquemines LNG export facility, expected in 2023.

“Thanks to the FOB formula, we will be able to decide, independently and based on our needs at a given time, whether the purchased LNG load should be directed to Poland or be used for further trading through our London office,” Piotr Wo?niak said in a statement. 

“These are the first long-term contracts for purchase of LNG from the US announced in Central Europe,” Maciej Wo?niak noted.

Currently, more than half of Poland’s gas supply comes from Russia under a long-term deal with Gazprom that expires in 2022. PGNiG doesn’t plan to extend its agreement with Russia and is looking to secure supplies for after 2022.

Related: China Can’t Get Enough Of The World’s Cheapest Crude

Poland’s Prime Minister Mateusz Morawiecki said at a press conference that the previous government wanted to sign a binding deal with Gazprom until 2037.

“This would be like putting handcuffs on Poland and making us reliant on Russia for many years,” Morawiecki said, as quoted by Reuters.

Poland is also trying to diversify its oil supplies away from Russia.

Poland’s largest oil refiner, state-run PKN Orlen, has bought its first ever Nigerian crude oil cargo that was expected to arrive in mid-October, the Polish company’s chief executive Daniel Obajtek said earlier this month.

By Tsvetana Paraskova for Oilprice.com

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