Page 6 - FSUOGMWeek352019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Poland, Ukraine, US build ties in gas sector
POLAND
WHAT:
Poland has agreed to resell LNG from the US to Poland.
WHY:
The three countries want to foster closer ties in gas supply security.
WHAT NEXT:
US efforts are part political and part commercial.
POLAND plans to supply a batch of LNG set to arrive from the US in two months to Ukraine, as the three countries look to bolster co-operation in the gas sector.
e shipment to set to be received at Poland’s LNG import terminal in Swinoujscie in early November, the country’s state-owned PGNiG said on August 29. Once regasi ed, it will be sent by the under of the year to Ukraine via a gas con- nection at Hermanowice near the two countries’ border.
e batch will be sold to US investment rm Energy Resources of Ukraine (ERU), which intends to store the gas for delivery to customers in the 2019-2020 heating season.
Ukraine consumed 32.3bn cubic metres of gas last year, 10.6 bcm of which was imported from EU and the rest covered by domestic sup- ply. It has not bought any gas directly from Rus- sia in almost four years, as relations between Kiev and Moscow remain hostile over the latter’s 2014 takeover of Crimea, conflict in eastern Ukraine and a multi-billion dollar dispute over gas transit terms.
Poland is also anxious to curb Russian sup- ply, which currently meets two thirds of its con- sumption of 15 bcm per year. Since the launch of the 5 bcm per year Swinoujscie terminal in 2015, it has been able to import from the US and other suppliers. With these alternatives at hand, Warsaw does not plan to renew its gas supply contract with Gazprom a er it expires in 2022. A er this point, it will only buy Russian gas on a spot basis.
Selling LNG volumes onto Ukraine will ena- ble Poland to utilise more of the Swinoujscie terminal’s capacity in the meantime. e facility has already seen increasing use, accounting for 20% of Polish gas imports last year versus 8.5% in 2016, according to PGNiG. Its capacity is set to reach 7.5 bcm per year by 2021.
Poland began supplying gas to Ukraine in August 2016. e only thing preventing the coun- try from exporting greater volumes is limited pipeline capacity at the Ukrainian border, PGNiG President Piotr Wozniak said in a statement.
“We expect the capacity of these gas pipelines to be expanded by 2021 at the latest,” he said.
“ anks to the partnership with our Polish companion, we are making tangible break- throughs in building a transatlantic gas supply corridor from the USA to Ukraine,” ERU presi- dent Dale Perry added.
Poland, Ukraine and the US are set to formal- ise their co-operation in gas supply, with repre- sentatives from the three countries signing a pact
on August 31 on enhancing gas supply security in the region.
“We are interested in diversi cation of gas supply and obviously access to LNG is one of the ways to diversify gas supply,” Oleksandr Dany- lyuk, secretary of Ukraine’s national defense and security council, told Reuters. “ ere is an existing LNG facility in Poland which is being expanded now and we are interested in being able to use it. It is in the interests of Poland, it is in the interests of Ukraine and it is in the interests of the United States as a supplier. I think it is what we call win, win, win.”
US efforts to broaden co-operation with Ukraine and Poland on gas are both commercial and political in nature.
On the one hand, the US is eager to carve out a market share for its LNG exports to Europe, with supplies having already reached record highs this year on the back of new project completions and weaker LNG prices in Asia. Domestically, US President Donald Trump's administration is also slashing domestic red tape on oil and gas production to give these exports a competitive edge.
On the other hand, Washington is eager to weaken Russia's position in the European gas market to ramp up economic pressure on Mos- cow. By helping Ukraine with its gas needs, it is also bolstering the country’s supply security, making it less vulnerable to Russian political pressure.
While the US has succeeded in creating a real threat to Russian market share on the continent, its plans to block Gazprom’s Nord Stream 2 pipe- line are unlikely to succeed. e pipeline is now more than third-quarters complete, while US lawmakers continue to debate potential sanc- tions on companies involved in its construction. What is more, US opposition to the pipeline has fuelled tensions between Washington and Ber- lin, which views Nord Stream 2 as a lucrative source of cheap gas. ™
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w w w . N E W S B A S E . c o m Week 35 04•September•2019