LNG terminal set to redraw Poland’s energy map

Artist view of Polish LNG terminal.jpg

Poland took a decisive step yesterday (20 November) towards building a liquefied natural gas (LNG) terminal on its Baltic coast, a project that could significantly reduce Central and Eastern Europe's reliance on Russian imports.

Polskie LNG S.A., a company established to construct and operate LNG terminal in ?winouj?cie, launched a review to assess demand for the technical expansion of the terminal and the provision of additional services.

The objective of the facility is to diversify gas supply and improve energy security in the region, the company said in a statement.

The ?winouj?cie terminal is scheduled to being operations in the second half of 2014. In the starting phase, the LNG terminal will have a capacity of 5 billion cubic metres of natural gas per year (bcm/y).

Poland consumes 14.38 bcm/y and produces 2.97 bcm/y, a recent study shows. Of all gas consumed in Poland, 63% is Russian gas. Consequently, the LNG gas imports would reduce Russia’s share in the country’s gas imports.

“We expect our terminal to play an important role not only on the energy map of Poland but also in the entire region of Central and Eastern Europe, offering the clients a wide range of business opportunities", said Rafa? Wardzi?ski, chief executive of Polskie LNG.

As EURACTIV recently reported, the European Bank for Reconstruction and Development provided a €75-million, 12-year loan to Polish gas grid operator Gaz-System to begin building the ?winouj?cie terminal. The rest of the financing for the total cost of €660 million will come from the European Commission via grants, the European Investment Bank and the company's own finances.

The terminal will receive oil-indexed gas supplies from Qatar, but two-thirds of its import capacity will be reserved for gas imported on a spot basis from elsewhere, potentially opening the door to cheaper energy.

Poland has made efforts to build an LNG terminal on its Baltic coast to reduce its reliance on Russian gas.

In 2010, Berlin opposed to Poland receiving an EU grant to construct such a terminal due to environmental concerns. But the Polish press argued that the real cause of Germany's unease is that the new terminal would compete with the Nord Stream gas pipeline, which links offshore Russia to Germany.

Poland relies on Russia for almost all of its imported supplies and poor connections to nearby European markets hamper attempts to diversify the market.

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