From increasing gas import capacity to signing deals with companies from countries as far away as the United States, Poland is taking active measures to diversify its energy mix with low cost LNG. This is an exciting time for Poland with several developments happening in supply contracts, infrastructure development, and technological innovations in the gas sector. These developments and more will be discussed in depth by leading experts including representatives of the Center for Industrial Development at the upcoming Polish LNG Conference. The purpose of this article is to brief our audience on the key themes that are critical to the discussion going into the conference.
Diversification of Energy Supply
Energy diversification is a top priority for Central Europe given Russia’s history of using gas supplies as a geopolitical tool. Poland in particular has received LNG imports from countries like Norway, Qatar, and the U.S. since 2015 alone. Diversification from Russian gas supplies is thus central to Poland’s LNG outlook.
Polish authorities have opposed the development of the Nord Stream 2 pipeline which would be yet another Russian pipeline directly into Europe. Many question the economic sense of the pipeline, focusing instead on the geopolitical leverage it would give Russia over Central and Eastern Europe. LNG pricing plays a central role in these developments. The global market is truly a buyer’s market at the moment, and demand for diversification from countries like Poland will force the major players to drive their costs down.
Both Polish and international perspectives on this issue are vital for finding a way forward. To this end, the conference will feature a variety of international speakers who will all weigh in on this key issue of diversification.
Opportunity for U.S. Firms
Poland’s energy outlook represents a massive opportunity for U.S. companies. The country wants to become a source of American imports into Europe. When President Trump visited Poland earlier this year, the U.S. role in Polish energy diversification played a central role in his keynote speech. It is an understatement to say that both President Trump and Polish President Duda are encouraging business relationships between the two countries. Poland has taken key steps to opening these opportunities by having constructed a billion dollar LNG terminal in Świnoujście. More recently, U.S. companies like Cheniere Energy have already begun to send LNG tankers to Poland. It is clear that both countries are continuing to progress towards long-term diversification within the framework of the EU Energy Policy.
A key point, however, is that, as a Russian energy consultant said, “LNG delivery contracts are concluded between companies, not between countries.” There is concern that U.S. suppliers will prioritize South America or the Asian-Pacific region for customers, given the high prices paid there. Thus, there is still much progress to be made in the area of diversification. Russia still supplies over 35% of Europe’s gas imports, and close to 25% of European countries rely on Russia for over 75% of their annual gas imports. At the same time, the U.S. is just beginning to export its LNG, only exporting a fraction of what Russia alone produced in 2016.
The important date for a change in these developments may be 2022, when Poland’s largest long-term contract with Gazprom expires. Though it would be keen of U.S. suppliers to begin making their moves into this major European gas market now. Building relationships is the first step, and the upcoming conference is the best place to form those relationship.
CID is willing and able to help U.S. and European companies with establishing these critical business relationships today, so your company is better positioned for the gas market of tomorrow. Find our representatives at the conference so we can meet, discuss your goals, and find ways to help position your company for this next era of energy diversification in Europe.
Domestic Challenges to Poland’s Energy Agenda
In many ways, infrastructure development is the limit to Poland’s energy ambitions. Gaz-System S.A. is the primary operator of Poland’s Świnoujście LNG terminal, operating it on behalf of the Polish National Oil and Gas Company. The upcoming conference will present a unique opportunity to hear directly from the company regarding how the challenges of infrastructure will be met.
One interesting topic of discussion will be the role of financing, which is often the limiting factor of LNG projects. There are many potential solutions to the issue of financing. The EU has shown initiative in financing gas projects like the off-shore LNG project in Croatia that was given 102 million euros with the explicit purpose of diversifying supply from a single source. This is promising for other EU countries looking to do the same, and the money is there: the EU has allocated over 5 billion euros to energy infrastructure for the 2014-2020 period.
Another potential source of financing is public private partnerships (PPP). PPP show great promise for building LNG infrastructure given the realities of project costs, and the clear mutual interests between governments and companies for increasing energy supply. CID is seeking to serve as an intermediary for these collaborations, and would be glad to begin discussions (either online or at the conference) with any supplier or manufacturer looking to collaborate with governments.
These financing perspectives and more will be discussed at length at the conference, making it a can’t miss event for firms looking to do business in the European gas market.
Preparing for the Future European Gas Market
When discussing these exciting developments, it is key to look to the future and ask, “are we ready to take advantage of tomorrow’s energy realities?” Many companies and industries have begun to ask this question. A great example of this is the transportation industry, which will be present at the upcoming conference. An increased and affordable supply of gas and energy has implications not only for power generation, but for consumption as well. The conference will give us the opportunity to hear from key voices in this market including NGVA, a trade association for natural gas-powered vehicles, and Italian vehicle manufacture Iveco.
A Can’t Miss Event
The upcoming first annual Polish LNG Conference will bring together all the most important stakeholders relevant to the future of European gas. The perspectives that will be shared and the discussions that will be had make it a can’t miss event for any organization interested in participating in the European gas market. CID is proud to be a sponsor for this event, and believes that cross-sectoral collaboration is the key to maximizing the endless benefits of secure, reliable, and affordable energy for Europe.
We highly encourage you to register for the event and to look for our CID representatives to discuss opportunities at the conference. If you cannot make it to the event but would like to get in touch with CID to discuss the opportunities mentioned in this article, please contact us here. CID will be publishing an article discussing the highlights of the event, so look for that as well by following us on our social media
We look forward to seeing you at the Polish LNG Conference!