Tuesday, September 29, 2020
Home Oil & Gas GAZ-SYSTEM signs deal to expand Poland's LNG terminal

GAZ-SYSTEM signs deal to expand Poland’s LNG terminal

Polish gas grid operator GAZ-SYSTEM signed contracts of 1.9 billion zloties (4.27 million euros) to increase the capacity of its liquefied natural gas (LNG) terminal in Świnoujście to 8.3 billion cubic metres (cm) by 2023 aiming to diversify the supply of strategic energy resources.

Polskie LNG, a subsidiary of Gaz-System together with the Szczecin and Świnoujście Seaports have signed the agreements with the consortium of PORR SA and TGE Gas Engineering GmbH for the expansion of the land part, as well as the sea part of the Świnoujście terminal.

The expansion plans include, among others, to add a new LNG tank with a capacity of approximately 180,000 cubic metres. By 2023 the terminal will see its annual regasification capacity increase from the current 5 bcm to 8.3 bcm.

According to Tomasz Stępień, President of the Management Board of Polskie LNG and GAZ-SYSTEM expanded capacities of the terminal will increase flexibility and gas storage possibilities.

“As a result, the frequency of accepted LNG tankers will increase, which will translate into greater security of natural gas supply to the national transmission system,” he said noting that the investment decision will stimulate the development of the regional and European gas market.

The Polish government strives to move away from the currently dominating East-to-West supply route and considers the terminal to be an important pillar of the country’s energy independence.

“The LNG terminal in Świnoujście is the largest liquefied natural gas facility in Northern and Central-Eastern Europe and its expansion is one of the strategic Polish investments that will contribute to the diversification of natural gas sources and improvement of the country’s energy security,” commented Małgorzata Jarosińska-Jedynak, Minister of Funds and Regional Policy.

Leading Polish oil and gas company PGNiG also intends to demonstrate prominence on the LNG market. At present, PGNiG reserves 100 per cent of the regasification capacity of the terminal in Świnoujście, which amounts to 5 billion cubic metres annually. However, the company’s needs are constantly growing and are expected to further increase under long-term American import agreements.

The Open Season procedure to submit offers for the capacity of the Świnoujście terminal finished a month ago when PGNiG signed an agreement with Polskie LNG to book all of the regasification services at the facility. Under the agreement, Polskie LNG will provide a transitional regasification service from 2022-2023, for 6.2 bcm per year and a basic regasification service from 2024-2038, amounting to 8.3 bcm annually.

Polish Deputy Prime Minister and Minister of State Assets Jacek Sasin praised the extension of the LNG terminal not only because it strengthens the country’s independence from Russian supplies, but also because it ensures stable and uninterrupted supply of gas for Poland in face of growing demand.

End-use consumption of natural gas in Poland has grown from 14.5 bcm in 2010 to about 18.6 bcm in 2019, an increase of more than 30 per cent, as the domestic gas network has expanded and new industrial, residential and commercial customers have been connected to natural gas.

Growing gas demand, declining domestic supply and aspirations to end the dependence on Russian energy supplies have put the pressure on Polish decision-makers to diversify the country’s energy portfolio, switching to alternative deliveries of LNG.

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