Thursday 28 August 2014
Poland might lose its competitve advantage in the LNG transmission in Central- Eastern Europe
Despite the fact that Swinoujscie’s LNG terminal is finished in 90 %,
many independent observers have pointed out the adverse nature of the gas
supply contract that Poland has with Qatar. In the same time, Lithuania is
proceeding with the development of their own LNG terminal that became
attractive alternative for the gas supply in all central European region. Have Poland taken unprofitable decisions in trying
to be independent from Russian gas supply?
The opening
the LNG terminal in Swinoujscie is, despite the final stages of the
construction, still being delayed. From the heoretical point of view, it is not
a big problem – example of other European terminal’ construction proved that it
might happen. What becomes a critical point is the competition that invests and
develops projects much faster, making Polish investment less beneficial than
previously planned.
One of the
biggest threats to Swinoujscie’s terminal is floating terminal at the port of
Klaipeda, in Lithuania.
The
floating terminal is a ship equipped with appropriate storage installation which
enables handling and regasification of liquefied natural gas at the destination port. Described unit has been built in South Korea
and is said to be on its way to Lithuania, arriving at the port at
the turn of October and November. Lithuania, which is totally dependent on
Russian gas supplies, would like to become more
independent with this was of supply. In the same time, the capacity of the
terminal can cover all the demand of Lithuania . The
responsible for the investment is a state company
Klaipedos Nafta.
The
price of gas from Lithuanian terminal will to be associated with
the rate of NBP (National
Balancing Point) - British gas exchange index.
As reported by LitGas,
taking into account the value of the NBP
from the last four months,
today's price for the Lithuanian LNG (with Norwegian gas)
would be equal to 900-1000 litas, which is approx. 400 dollars. per 1000
cubic meters. At the beginning of the year. Lithuanian media stated that the 1000
cubic meters. Russian gas costs approx. 450 - 460
dollars. In May this year. Lithuania managed to negotiate
a price reduction in the contract
with Gazprom. The Lithuanian government
announced then the establishment of a
new formula for the price of
Russian gas, effective the end of
2015. According to media reports,
Gazprom agreed to
lower prices for
Lithuania for 1.5 years by more
than 20 per cent., which would
mean that per 1000 cubic meters.
Russian gas Lithuanians will pay approx. 370
dollars.
Poland
wanted to sell LNG in the countries of our region, seeing
construction of the LNG terminal not only as strategic investment but
also as possibility of financial benefits. Today,
views less optimistic. Competition grows not only in Klaipeda. Finland and
Estonia have recently reached an agreement for the construction of two terminals for transshipment of liquefied gas. Even in Germany, after
the events in Ukraine, there have been loudly said opinions about the need to resume the construction of the LNG terminal in Wilhelmshaven. The
overall Polish balance might be much less positive as initially planned.
On
the top of the closeness of terminal in Klaipeda, the current gas supply
contract Poland has with Qatar are far from favorable. As points out Polish
edition of Newsweek, delivery of
1.5 billion cubic meters of LNG
per annum is expected to begin in the coming months. In the most dramatic scenario, if the government will not
be able to re-negotiate the contract and start the delivery later, tankers
with gas from
Qatar will have to be unloaded
in the ports of Western Europe and delivered with high fees or Poland will be
forced to pay for storage at the closest points to the
terminals.
The article has been written based on:
Picture illustrates an example of the floating LNG terminal:
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Key word: output of the Lithuanian LNG-Terminal is 3 bilion m^3 (info form your links). And you said:"attractive alternative for the gas supply in all central European region"... No comment.
ReplyDeleteI am not sure if you understood the information in the reference website well.
ReplyDeleteThe Lithuanian terminal will have capacity of 4 billion m3 annually. Considering the fact that (as stated in the article), Lithuania has yearly demand of 3 billion m3 of gas, Estonia 0,7 billion m3, Latvia 1,7 billion m3 ( all 100 % bought from Russian Gazprom ) - yes, it is very attractive diversification of the gas supplier in the region
Yes, my fault - 4 billion m3/year. And true that this is attractive for Lithuania, Latvia and Estonia.
ReplyDeleteBut the Baltic states =/= " all central European region".