Page 7 - EurOil Week 30 2021

EurOil COMMENTARY EurOil

The MoU is non-binding, and a definitive market. Expanding our co-operation with Ven-
agreement between Sempra and PGNiG would ture Global LNG fits in with both of these goals.”
need to be finalised. The companies noted that as
part of the MoU, they are also working towards Appetite for LNG
a framework for the reporting, mitigation and PGNiG’s moves illustrate that the appetite
reduction of greenhouse gas (GHG) emissions for striking new LNG supply deals is return-
throughout the LNG value chain. ing. LNG producers in the US and elsewhere
“We are also determined to curb the car- have seen a flurry of new deals recently. Indeed,
bon footprint of fuels offered by PGNiG and the decision by PGNiG to back out of the Port
we are convinced that co-operation with LNG Arthur SPA could suggest that acquiring LNG
producers like Sempra LNG will contribute to has taken on new urgency, and that the company
reaching this goal in the most effective way,” said prefers to commit to projects that appear more
Majewski. certain to move forward in the near future. And
Meanwhile, PGNiG made a separate Venture Global is currently targeting an FID
announcement that it had agreed to buy an addi- on Plaquemines LNG in 2021, even as Sempra
tional 2mn tpy of LNG from another US-based pushes back the timeline for Port Arthur.
company, Venture Global LNG. PGNiG already As well as seeing environmental benefits to
had agreements in place to buy LNG from both buying LNG, Poland is keen to eliminate the
Venture Global’s Calcasieu Pass LNG project, need for imports of natural gas via pipeline from
which is under construction, and its proposed Russia. Warsaw has been deepening its energy
Plaquemines LNG project. The latest agree- co-operation with the US and also hopes that
ment raises the volumes that PGNiG will buy the North American country will help finance
from Calcasieu Pass to 1.5mn tpy from 1mn tpy Poland’s first nuclear power plant (NPP).
previously, and those from Plaquemines from However, relations between the two countries
2.5mn tpy to 4mn tpy. Once the relevant SPAs are have been strained recently by the US’ agreement
amended, PGNiG will stand to buy 5.5mn tpy with Germany over the Nord Stream 2 pipeline
in total from the two Venture Global terminals, from Russia. Poland opposes the Nord Stream 2
which are both located in Louisiana. project, claiming that the pipeline is a threat to
“LNG plays a vital role in PGNiG’s strategy,” energy security in Central and Eastern Europe.
said Majewski. “It is a key component of our The US and Germany are seeking to alleviate that
supply portfolio diversification and the plan to potential threat, with their agreement including
reinforce the energy security of our customers. penalty costs for Russia if Moscow uses the new
Moreover, based on LNG, we plan to develop pipeline to harm Ukraine or other Eastern Euro-
our commercial activity in the global trading pean countries. ™

PIPELINES & TRANSPORT

No binding bids for extra TAP capacity

EUROPE NO binding bids were lodged for additional capac- TAP said it offered three expansion scenarios:
ity in the 10bn cubic metre (bcm)/year Trans a limited expansion to 14.4bcm/year, a partial
The pipeline’s operators Adriatic Pipeline (TAP) that brings gas from Azer- expansion to 17.1bcm/year and a full expansion
had mooted expanding baijan via Georgia, Turkey, Greece and Albania to to 20bcm/year. The earliest a capacity expansion
its capacity up to 20 Europe, the operator announced on July 22. for the pipeline, which makes landfall in southern
bcm per year. As part of the binding phase of TAP's capacity Italy, could have been realised was October 2026.
expansion market test, an invitation for bids to Platts Analytics said it had been skeptical on
be submitted from July 17-20 was sent out. TAP's expansion for a while given declining gas-for-
TAP, which was opened as the final segment power demand, an already reduced dependence on
of interconnected pipelines that make up the Russian gas due to the current TAP capacity, as well
Southern Gas Corridor (SGC), has been cele- as the expansion of the Passo Gries interconnection
brated by the EU as providing effective diver- point on the border with Switzerland.
sification away from over-reliance on Russian "It is also understood that Turkey's vision of
gas. The result of the market test might pose increased domestic gas production is limiting its
questions as to the level of future European gas appetite for longer-term import commitments,
demand and the necessity of securing additional reducing the need for further TANAP/TAP
import capacity. expansions," it said.
"We weren't assuming any expansion of TAP Despite the lack of binding bids, non-binding
in our long-term forecast so this certainly sup- capacity and connection requests can be submit-
ports that view," S&P Global Platts Analytics' ted up to September 6 as part of the new market
managing analyst James Huckstepp said. test, TAP said.
"Despite prompt prices holding up close to all- TAP's shareholders are BP (20%), Azer-
time highs the curve is extremely backwardated, baijan's Socar (20%), Italy's Snam (20%), Bel-
which likely reflects pessimism around longer- gium's Fluxys (19%), Spain's Enagas (16%) and
term demand prospects," Huckstepp said. trader Axpo (5%).™

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