PGNiG: rising LNG imports drive Russian gas share down in 2018

Polish Oil and Gas Company (PGNiG) said that the share of gas imports from Russia fell to 67 percent as the share of LNG imports increased to over 20 percent in 2018. 

PGNiG imported over 0.62 bcm less natural gas from Russia than in 2017, dropping 6.4 percent, as imports from the east amounted to approximately 9.04 bcm, as compared to some 9.66 bcm in 2017.

LNG imports from Qatar, Norway and the United States in 2018 increased by nearly 1 bcm or 58.2 percent and reached over 2.71 bcm after regasification, comparing to 2017, when approx. 1.72 bcm of LNG was imported.

Consequently, in 2018, imports from the eastern direction accounted for 66.8 percent of the entire PGNiG import volume, which compares to 88.9 percent in 2016, PGNiG said.

LNG imports accounted for over 20 percent of the total import volume up from 8.4 percent in 2016. The remaining volume is covered by imports from the western and southern directions, PGNiG said.

Throughout 2018, PGNiG imported approximately 13.53 bcm of natural gas to Poland. According to the domestic forecast, production totaled 3.8 bcm.

“The take or pay clause in the Yamal contract signed in the mid-1990s obliges PGNiG to pay Gazprom until the end of 2022 for approximately 85 percent of the contracted volumes of gas, regardless of whether we bring them to Poland or not,” said Maciej Woźniak, PGNiG’s vice-president for commercial affairs.

He added the company is looking to reduce the volumes to the contractually required level and is looking to settle the non-market terms dispute before the Stockholm Court of Arbitration for several years now.

“Therefore, our current priority is to build an alternative, long-term portfolio of secure supplies from 2023 onwards, based on market principles and prices. This portfolio will be based on both LNG and gas from the Norwegian shelf imported via the Baltic Pipe,” added Woźniak.

PGNiG has been implementing its strategy of reducing the dependence on a single dominant supplier. In addition to the expansion of the LNG portfolio, the company is preparing to start supplying the Polish market with gas produced on the Norwegian Continental Shelf, following the launch of transmission via the Baltic Pipe interconnection through the North Sea, Denmark and the Baltic Sea at the end of 2022.

The rapid increase in imports of liquefied natural gas in 2018 is primarily the effect of the additional agreement with Qatargas signed of 2017. After 2020, annual imports from Qatar may even reach 2.7 bcm after regasification.

Moreover, already in 2019, the first LNG deliveries from Cheniere will reach Poland under long-term contracts concluded in 2018 with suppliers from the USA.

Following contracts to buy American LNG, in the years 2023–2042, PGNiG will have an incremental yearly portfolio of over 7.3 bcm after regasification, equal to 5.5 million tons of LNG.