In Just Over a Year, American LNG Reaches Europe Via Poland

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K.J. Rodgers
Crownsville, Maryland  

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In just under a year, American LNG has reached new markets near and far. Now, we are in Europe by the way of Poland through an historic deal. 

One year doesn’t seem to be a very long time. A year comes and goes quickly for most of us as we get older and time starts to just fly by. However, a lot can happen in a year. We have a new President, a weaker Josh Fox, and have now seen U.S. Liquefied Natural Gas exports fly out of the gate.

Just over a year ago, the US exported LNG for the first time in 50 years.   We discussed then the major impacts this would have on the world markets. Then in September, we sent a shipment to the Ineos petrochemical plant in Scotland, sending our LNG,  for the first time, to the UK. Now, with more and more countries seeking to limit entanglements with Russia, we have a new client: Poland.

Poland Natural GasJust as April was closing out, Poland’s Polish Oil & Gas Company (PGNiG) made a deal to import LNG from Cheniere Energy’s Sabine Pass starting in June. This marks the first shipment of American LNG to northern Europe. Setting up a trading office in London, PGNiG has decided to cut its ties with the Kremlin. It has, for lack of better terms. been looking to set itself up as a gas broker. This move not only ensures a reliable source of natural gas for Poland’s own use, but also marks an entry way for LNG to be distributed by pipeline to other parts of northern Europe. Poland plans, for example, on developing a pipeline to Norway and other similar infrastructure.

While it would be nice to say we are going to be an exclusive supplier, we know that can’t be. Qatar is already supplying some gas as part of a 20 year agreement in 2015. At the time, Poland’s Ministry of Treasury said:

“With new gas pipelines, interconnectors, virtual and reverse on the Yamal Gas Pipeline, as well as with below-grade stores and own extraction, it will strengthen gas independence of Poland.”

This was the green flag waving to start the race, because PGNiG’s CEO, Piotr Wozniak, hinted this is going to be key to an intra-country distribution line throughout Europe. He said:

“North America is becoming the next region for acquiring this strategic commodity after Middle East and Norway. We consistently fulfill our strategy of diversifying gas deliveries to Poland… A future delivery from the USA proves that Poland can become a gateway to Central and Eastern Europe for American LNG.”

Poland's Natural Gas Distribution Polish Prime Minister Beata Szydlo called the agreement “commercially attractive” without going into specifics. I can only assume the supply we have accumulated made for an unbeatable deal. It would have to be attractive, as we are shipping gas all over the world including to Turkey, the UAE, and Jordan – Qatar’s neighbors.

Exports via, not only cargo ships, but also pipelines to Canada and Mexico are the solution to balancing supply and demand, which is especially good news for farmers, landowners and other royalty owners in places such as rural Pennsylvania. This has led to an astroturf group called the Industrial Energy Consumers of America suggesting we may be hurting ourselves. They penned a letter to Energy Secretary Rick Perry that some of the approved 55 billion cubic foot per day for LNG exports may drive up domestic prices, but with 800 trillion cubic feet available, analysts believe we can keep pace with any new demand. It’s also more than a little hypocritical for chemical companies selling to the gas industry and hoping to export their own products to be engaging in such cynical moves.

We have, in just one year, gone from having so much supply that we undercutting our own production companies to being a powerhouse in international exports. We have, too, changed the geo-political landscape by giving new non-threatening options to nations who otherwise had no choice other than Russia and OPEC. It’s worth repeating something I wrote last year in this space regarding the climate benefits of natural gas, because now there’s a whole new benefit to consider: “natural gas is U.S.A. all the way and … saving our earth.”

The post In Just Over a Year, American LNG Reaches Europe Via Poland appeared first on Natural Gas Now.

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