Page 5 - FSUOGM Week 22 2022

FSUOGM COMMENTARY FSUOGM

European sales monthly at today’s prices. Once a in Europe, and widen its discount to Brent.
full ban kicks in, this would rise to at least $4.5bn Some European officials have also proposed
per month. a form of price cap or tariff that would keep Rus-
Oil can more easily be shipped elsewhere than sian oil supply in the market while limiting how
gas. But even so, Russia will still have to invest much revenue Moscow receives. But it is unclear
billions of dollars in infrastructure improve- how this would work in practice.
ments – pipelines, ports and tanker fleets – to Europe could also exert more pressure on
get its product to new markets. Russia and reduce its own costs by using less
The ban of course comes at a significant cost energy. For example, lowering motorway speed
to Europe, which is already struggling with limits by 10 km per hour in advanced economies
record-high energy prices that risk pushing it would save around 400,000 bpd of oil demand,
into recession. The price of Brent rose to a two- according to the International Energy Agency
month high of $119 per barrel on May 31, pro- (IEA).
pelled by the EU ban and anticipated growth in Meanwhile, Europe has not taken any steps
demand as coronavirus (COVID-19) lockdowns towards an embargo on gas supplies from Rus-
eased in China. sia, given that the LNG supply and LNG infra-
Europe could do more to disrupt Russian oil structure simply is not in place yet to make this
flow. It could, for example, bar European insurers achievable. Russia has begun cutting off supply
and shippers that Russia relies on to transport its to some countries anyway, however, for their
oil around the world. This would make it much refusal to comply with its demand for gas pay-
harder for Russia to sell its oil anywhere, not only ments in rubles. ™

PIPELINES & TRANSPORT

Poland mulls third LNG

import project

POLAND POLAND is considering the construction of a with Lithuania that was launched in May has also
third LNG import terminal in order to accom- given the country access to imported gas via the
Poland is already modate transit supplies to neighbouring Slova- Klaipeda regasification terminal.
expanding its existing kia and the Czech Republic, its climate minister A wave of new LNG import projects, pre-
terminal and has plans said on May 30. dominantly FSRUs, have been proposed since
for two more. The country already has a 6.2bn cubic metre Moscow launched its invasion of Ukraine in late
per year regasification terminal in operation in February. Moskwa said that the second FSRU in
Swinoujscie that is undergoing an expansion that Poland would support the goals set out in Brus-
will lift its capacity to 8.3 bcm per year by 2023. sels’ REPowerEU initiative, which calls for a cut
It also plans to bring online a 6.1 bcm per year in Russian gas supply of as much as two thirds
floating storage and regasification unit (FSRU) within a single year.
in Gdansk in 2025. In Poland, authorities have been preparing
After losing its Russian gas supply last month for a future without Russian gas for many years.
when it refused to pay for deliveries in rubles, Successive governments have declared their
Warsaw is eager to see these projects realised as intention not to buy any gas from Russia after the
quickly as possible. And with the Czech Repub- existing contract between PGNiG and Gazprom
lic and Slovakia also pushing to end Russian gas expires at the end of this year. Poland terminated
imports, the installation of a second FSRU in that contract prematurely in May, accusing Gaz-
Gdansk may be justified, Minister Anna Moskwa prom of breaching the deal by demanding pay-
told the Biznewsalert website on May 30. ment in rubles. ™
“Different options can be considered,” she
said. “We could open another FSRU and charter
another vessel but this would be a responsibility
of our partners.”
This second FSRU could have a capacity of 6
or 12 bcm per year, Moskwa said, depending on
demand from Poland’s neighbours.
Poland’s plan to cut energy ties with Russia
for good also hinges on the launch of the 10
bcm per year Baltic Pipe this October, which
will bring gas from Norway. An interconnector

Week 22 02•June•2022 www. NEWSBASE .com P5