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On October 17th, Polish state-run gas company PGNiG announced that the country had signed a 20-year contract for deliveries of two million tonnes of liquefied natural gas (LNG) per annum from the US.
The contract was signed with US company American Venture Global LNG and would equal about 2.7 billion cubic meters per year after regasification, according to Management Board President Piotr Wozniak of PGNiG.
“We will be receiving two million tons of LNG annually from the US for 20 years,” Wozniak told reporters.
He also clarified that the LNG would be supplied on a free-on-board (FOB) basis. This basically means that the Polish side will be responsible for transport and logistics of the cargos.
No price was disclosed, but Wozniak claimed that the LNG from the US would be almost 30% cheaper than Russian natural gas.
Poland’s energy ministry, Krzysztof Tchorzewski, said the deal would help Poland diversify its gas supplies. “In the Polish context, this gas is a civilisational good,” he said.
Meanwhile, the Polish Prime Minister Mateusz Morawiecki has stated that US LNG would “boost” the country’s “sovereignty,” as well as its “competitiveness.”
“Our predecessors wanted to sign a deal with Gazprom until 2037. It would be gas handcuffs,” Morawiecki claimed. In contrast, signing a 20-year deal with a US company is in no way restrictive for Poland. Currently, PGNiG imports up to 10 billion cubic meters of gas per annum from Russia’s Gazprom under a contract that is due to expire in 2022.
In June, PGNiG signed a memorandum of understanding with US Port Arthur LNG and Venture Global LNG for LNG deliveries with the aim of diversifying suppliers.
“Purchasing of liquefied natural gas in the USA will not only allow further diversification of our import portfolio following 2022, but will also let us develop our trading competences and enable PGNiG’s presence as a global LNG market player,” PGNiG’s CEO was cited in his June statement.
In an interview with Polish news network TVP1, former Polish Defense Minister Antoni Macierewicz claimed that cooperation between Germany and Russia on Nord Stream 2 damages Warsaw’s interests.
“Germany pursues a policy of alliance with Russia and they jointly want to tighten the noose around our neck with the help of Nord Stream 2. They want to strangle both Poland and Central Europe, and forever make them dependent on their own economic and political power,” Macierewicz said.
He further commented that Poland can only remain an independent state if permanent US military bases are deployed in the country and if the Nord Stream 2 is never implemented. According to the former Defense Minister, both of these are key objective of Warsaw’s foreign policy. “We must understand that only the United States is lending support to Poland on these issues,” he noted.
Macierewicz also emphasized the importance of the Open Society Foundations of US billionaire George Soros, which, according to him, Warsaw resolve these two problems.
There are no economic facts or numbers presented to prove that buying US LNG is cheaper or makes more economic sense than buying Russian natural gas. It is apparent that the decision to “diversify gas suppliers” is not an economic one, it is a political one.
On October 8th, deputy spokesman Martina Fietz of the German government said that Berlin considers the Nord Stream 2 project a rational one. “We export gas from different countries, from Russia, and from the United Kingdom, Norway and the Netherlands as well. Germany’s demand for natural gas will… increase in the coming years and the Nord Stream 2 is among the projects that the German government considers to be quite rational,” she said.
Even earlier, German Economic Affairs and Energy Minister Peter Altmaier praised Nord Stream 2, saying it’s a project which “proved itself.”
“I want that private initiative, those initiatives that are aimed at (enhancing) energy security and growth to be successful,” he said.
In February 2018, German Chancellor Angela Merkel said that Germany considers the Nord Stream 2 project an economic one, that does not pose a threat to diversification of supplies.
Nord Stream 2 is a joint venture between Gazprom, France’s Engie, Austria’s OMV AG, UK-Dutch Royal Dutch Shell, and Germany’s Uniper and Wintershell. US State Department has threatened to sanction Western companies that are involved in the venture. So far, no sanctions have been imposed.
The US is a strong opposer of the Nord Stream 2 and it seeks to promote its LNG in Europe as an alternative to Russian gas. Thus, Poland is in a way a proxy of US interest aimed at attempting to pressure Europe. Washington will keep attempting to increase its energy sales to Europe, despite the US projects being costly. The US also aims to deter any kind of EU-Russian cooperation in the energy sector whatsoever.
The two end objectives of the US policy in this matter are simple: the Trump Administration aims at impacting the economy of its “geopolitical competitor” in the face of Russia and to increase its own influence in the region, while Russia’s own influence wanes.
” but Wozniak claimed that the LNG from the US would be almost 30% cheaper than Russian natural gas.” How would that be possible, unless subsidized by US, or does not include transport and logistics cost ?
Don’t forget, US won’t be footing the costs of delivery and logistics which together with fracking is why the US prices are generally higher. Just wait till the environmentalists take control.
if that is the case and it’s not simply outright bs (which is my opinion), Gazprom can lower prices as well. then we will see who can lower them the most.
Well it depends on the delivery. From the article, I gather the US LNG will be FOB shipping point. I think if they are willing to bending some realities, it’s possible that US LNG, FOB shipping point (we even don’t know if the point would be a US dock or the gas plant further inland) be cheaper than Russian NG, delivery in destination via pipeline.
LNG transportation and delivery is very costly (specially compared to the cheap and reliable pipelines) and specialized equipment dependent. Delivery and consumption also needs infrastructure and plants of it’s own (pressure breaker, conversion, etc).
Even if the LNG is provided as a loss leader, what remedies will the Poles have when the US decides to hike the rate; after all, we’re talking about a country which doesn’t honor it’s International agreements.
when the US decides to hike the rate
impossible. in usa the firms are free. the american goverment can not affect their price plocy.
The US certainly can affect the price through all sorts of ways. For example, removing federal subsidies would certainly raise the price. Changes in laws, taxes etc. there’s all sorts of ways that the government can affect the price of LNG. At the same time, countries purchasing LNG under contracts would be helpless to break those contracts. Incidentally, I was thinking about how contracts are written in the US. So many of them have clauses espousing that the corporation can change the terms of the contracts during the duration of the contract. I wonder how many countries have clauses like those in their contracts.
actually only one way.. making new debts. As long as US debt is accepted, they can force Poland to buy their 3 times more expensive gas.
The previous commentator war referring to US corporations. Poland is not forced to buy LNG anymore than Germany or any other EU country is. The issue with Poland is that they are so anti-Russian that they’re willing to shoot themselves in the feet as often as is necessary in an attempt to hurt Russia. Sometime in the near future, when Polish citizenry have to choose between food, shelter and heating their homes, the Polish government will experience a backlash. Of course they may, at that time, choose to go deeper and deeper into debt through the IMF, but it will end badly for the citizenry.
theoretically. practically will never kill the firms
Thats not the point. The point is to have at least some reserve, if Russia block for all gas.
Bloody fools. When has Russia ever used its gas supply as leverage against Poland? They will soon find out how trustworthy the Americans are should Poland choose to go against any American policies.
Honestly i dont think that Poland hat anything to say in that matter, i dont think Poland even got the chance to consider it, it was most likely an order from the US, dictating rather than asking or offering.
Very true. I had to laugh when he said that hosting US bases meant independence for the country. Some logic.
no way. poles are free, this is their free choice. after centuries of russian agression they are bitter enemies of ruskies.
Free huh? The EU is currently in process of applying significant political pressure, and imposing sanctions, to subordinate and reverse the recent domestic changes within the Polish legal system – into alignment with EU dictates.
bullshit. poles does not keep law they signed. very good, EU, kick poles.
If that is the case …..Poland placed itself in position to be dictated to by the US. Poland and the Baltic states cried out loud about the Russian bear in their backyard for the last few years.
and why, you retard?
Because America controls the Government. Read up on how the US started it’s attack on Yugoslavia under Reagan. The US spends years taking over the media and politicians. If the politicians don’t follow Uncle Shylock’s orders they start destabilizing the economy. It’s very easy for the US to sell down a currency, and raise interest rates. The whole purpose of the Euro is to stop American economic attacks.
bullshit.
ruskies severel times divided and occupied poland. each ple hates russians. with good reason
“No price was disclosed, but Wozniak claimed that the LNG from the US would be almost 30% cheaper than Russian natural gas”
good luck to the polish citizens when they open up the envelope containing the bills.
The reality is, that US LNG is three times more expensive then Russian gas. And you need to spend additional money on facilities in ports because LNG must be unloaded from ships and it is expensive process and/or takes a lot of time (up to months). So basically you pay for ship sitting in port and not doing anything except unloading or you unload gas relatively quickly with burners but you waste good portion of gas just to transform it from liquid state.
explain that to the poles, next time they’ll vote on the basis of russophobic diatribes instead of real economic issues.
Poland is paying through the nose for a being subservient US lap dog. Billions for Patriot missiles, billions for a base deploying a US armored division, expensive LNG….etc.
sure.they hasd wrong exoeriences with ruskies.
The US has bought or blackmailed the Polish politicians. That’s how the US does business.
you know nothing about europe. ALL polish government were anti-russian. also the communists. they only were under russian boot.
But they love Germans :D Something smells.
also with germens have wrong experiences. they are between two strong enemies
One point in the conversation here is the gas is Private not a Government entity like Russias is. You cannot make a construct in comparison. Here private companies shut down wells all the time when prices are to low to make it profitable.
“””Here private companies shut down wells all the time when prices are to low to make it profitable.”””
Trump can subsidize them in his glorious effort to carry on a trade war, and reach the European natural gas market. What happened to the frackers when oil was in them 20’s?
trump can only fart, nothing else.
That’s already happening, shale oil drillers basically get interest free money, because it’s in the national interest. When the price of oil dropped, the US Federal Reserve told banks to continue valuing the oil companies at a $100 a barrel oil price. America isn’t a free enterprise system, it’s corporatocracy.
It was not in the national interest to drill for oil under Obama, he was anti oil, when Obama tried to squeeze Russia with lower oil prices, something the Saudis participated willingly, both US and Saudis shot themselves in the foot, US facing hundreds of billions in loans to the frackers to get defaulted, that was going to cause another financial crisis reminiscent of 2008, while the Saudis ran huge budget deficits because of lower oil revenues.
In Russia, a semi state agency runs energy production and distribution.
In the US, a private energy corporation runs the US Government.
Which system benefits the consumers more?
Trouble is that if Russian energy was in private hands it would also be run by American corporations.
Pigs will fly before that ever happens, thankfully.
why?
Because that’s how America earns a living, it’s the world champion shyster.
the american
As far as I understand this pipeline bypasses Poland anyway. Of course that does not preclude some gas finding its way into Poland. The USA does not want this pipeline at all. So I see this as just a step in the direction of isolating Western Europe from Russian gas. The big prize for the USA is if they can make Germany step away from the project. I would not discount this possibility. Time will tell.
The Nord Stream 2 pipes are being laid down in the Baltic seabed as we speak. 6 km per day. The line will be completed and operational by the end of 2019.
I understand what you are saying. May be it will operate normally, but I think the USA will not stop in trying to make sure it does not. Even after it is built.
The problem with the current American offensive against a free energy market in Europe, is it’s pushing Germany into closer ties with Russia and China. If those 3 ever get together, they will dwarf the USA.
Yes I think this is true. But my guess is that in the end Germany will move back to the American fold.
Why, what’s in it for Germany? Alliances are basically about economic symmetry. The US is trying to stop German exports to the US, but China welcomes German exports. China is a growing market, the US is a declining market.
I don’t believe political elite act either in the interests of the nation or are totally governed by economic considerations.
“The USA does not want this pipeline at all.”
When the US staged its coup in Ukraine, one of the first things it did was grab control of the gas pipelines from Russia, through Ukraine, and on to Poland and other countries. The US wants control of energy supplies to Europe, just like the British controlled energy supplies to Europe. That’s what WWI was about, protecting BP.
Poland will end up Russia’s ally.
20 years of paying high prices and being held hostage by US.
I just can’t understand how these politicians can so betray their country and people. The higher gas prices will mean that Polish industry will not be able to compete, the factories will move to other countries and the people will be poorer. I wonder how much it costs to buy a traitor.
I can see how so many here again are mislead needing solid facts from the real world and well orchestered by economy only.
Hey, it is internal Polish problem. They are retards since 1989, they had the most soldiers in Yugoslavia,Afghanistan, Iraq, they are the worst Russophobes just after Ukraine and they want to ruin their own economy. As long as they are shooting their own legs I’m fine with it. If Russia decides nuke them because of NATO military bases and NATO missiles pointed at Russia, I’m fine with it.
Well, if they want to cripple their economy, let them.