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PGNiG buys more LNG from Venture Global LNG, terminates Port Arthur agreement

Poland’s leading gas supplier, PGNiG said it signed agreements to increase liquified natural gas (LNG) purchases from US company Venture Global LNG by 2 million tonnes a year to 5.5 million tonnes for 20 years. At the same time, PGNiG terminated a deal with US firm Sempra Energy for supplies from the Texas Port Arthur project due to delays.

“LNG plays a vital role in PGNiG’s strategy,” underlined Paweł Majewski, CEO of PGNiG SA. “It is a key component of our supply portfolio diversification and the plan to reinforce the energy security of our customers.”

More than 25 per cent of natural gas imported by PGNiG from abroad is LNG. Imports of liquefied natural gas in 2020 amounted to over 3.76 billion cubic metres (bcm) after regasification, which is an increase of nearly 10 per cent compared to 2019.

As Mr Majewski explained, PGNiG plans to develop its commercial activity in the global trading market and the new agreements with Venture Global LNG fit with this goal by increasing the volumes contracted in 2018 and 2019.

Instead of 1 million tonnes per annum (Mtpa), PGNiG intends to purchase 1,5 Mtpa from the under-construction Calcasieu Pass facility, while the Plaquemines contracted volume is to be increased from 2,5 Mtpa to 4 Mtpa. When both PGNiG and Venture Global sales and purchase agreements (SPAs) are amended, PGNiG will be purchasing from Venture Global 5,5 Mtpa of LNG (approximately 7,4 bcm of gas annually) for 20 years.

The SPAs signed with Venture Global LNG subsidiaries are on a free on board basis (FOB) which means that the seller will deliver LNG to an LNG carrier at the loading port and the buyer can freely dispose of the load. Both liquefaction facilities, Calcasieu Pass and Plauemines, are located in Louisiana. The first one to start is Calcasieu Pass with the commercial deliveries expected in early 2023.

At the same time, PGNiG also announced that it decided to terminate the SPA with Port Arthur LNG. PGNiG was to receive around 2 million tonnes of LNG per year under the deal, starting from 2023.

PGNiG signed a 20-year agreement with Sempra in 2018. Under the agreement, LNG was to be delivered on a FOB basis with PGNiG being responsible for lifting the cargoes from the 11 Mtpa liquefaction facilities located at Port Arthur LNG in Texas and shipping them to final destinations. However, in May Sempra delayed the final investment decision (FID) on the 11-million tonne/year Port Arthur LNG plant into 2022.

PGNiG’s decision was made due to delays in the project’s development. The two companies signed a Memorandum of Understanding (MoU) for a potential replacement of approximately 2 Mtpa LNG supplied from other Sempra LNG’s portfolio of projects in North America.

“We highly value our relationship with Sempra LNG and we are keen to continue it,” said the CEO of  PGNiG. “The MoU allows for shifting the volumes originally contracted at Port Arthur LNG to other facilities from Sempra LNG’s projects portfolio.”

As part of the MOU, Sempra LNG and PGNiG will also work toward a framework for the reporting, mitigation and reduction of greenhouse gas (GHG) emissions throughout the LNG value chain, says the press statement of PGNiG.

“We are also determined to curb the carbon footprint of fuels offered by PGNiG and we are convinced that cooperation with LNG producers like Sempra LNG will contribute to reaching this goal in the most effective way,” commented Mr Majewski.

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