Poland’s new gas infrastructure
First LNG receiving terminal opened
In October 2015, the first Polish LNG receiving terminal was officially opened. On 11 December, after an over 20-day journey from Qatar, the first shipment of LNG arrived to the newly opened LNG terminal in Świnoujście.
The construction of LNG terminal cost over 3 billion Polish zloty (PLN). The Polish government decided to build the terminal in 2006 and on 24 April 2009 the Polish Parliament adopted a Special Act on investments relating to the LNG regasification terminal in Świnoujście. The legislative procedure used in this case shows the importance of this investment, which was considered as strategic for Poland’s energy security. Pursuant to the amendment of 2014, the Act regulated not only the construction of the LNG terminal, but also other investments to be carried out through a simplified administrative procedure – 3,500 km of gas pipelines located in southern and eastern Poland, links with neighbouring countries (Lithuania, Czech Republic and Slovakia) and gas storage facilities. These investments will allow the full exploitation of the LNG terminal’s potential. The amendment simplified the administrative procedure by introducing immediate enforceability of administrative decisions and by shortening the deadlines for appealing such decisions, for reviewing the appeals and for issuing necessary concessions (for example building permits). The Polish Parliament’s intention with the 2014 amendment was to secure gas supply to the south-east regions of Poland, as the previously existing gas network did not allow for distribution of gas from the LNG terminal to these regions.
The shipment which arrived on 11 December – supplying natural gas for two days of statistical winter consumption in Poland – is one of two shipments which will be used for the cool-down and commissioning of the new terminal. The second shipment is planned to arrive by the end of February 2016. The Polish Minister of the Treasury Andrzej Czerwiński stated that only after this technical start-up phase has been completed would it be possible to pump the gas into the transmission and distribution system. The gas delivered in December and February will be gradually pumped into the distribution system, the actual automatic distribution, however, will begin in May 2016.
The LNG terminal in Świnoujście is the biggest LNG terminal in Northern, Central and Eastern Europe and one of the biggest on the whole continent. It consists of a port with a total area of 150 ha, an 80 km long gas transmission pipeline and a transhipment terminal, which includes shipment handling equipment, storage tanks, regasification installations and a pipeline connecting the terminal to the gas distribution network. The terminal has a regasification capacity of 5 billion cubic metres per year, which amounts to over 30% of Poland’s annual gas consumption. Moreover, there are future plans for increasing its capacity to 7.5 billion cubic metres per year. The terminal will reach its full capacity by 2018.
In 2009, the company Polskie Górnictwo Naftowe i Gazownictwo S.A. (PGNiG) signed a contract with Qatargas for delivery of 1 million tonnes (1.5 billion cubic metres) of LNG annually over a period of 20 years.
Poland currently imports around 11.2 billion cubic metres of gas per year, and, more importantly, 75% of the imported gas (8.5 billion cubic metres) comes from one country, Russia. The LNG terminal will strengthen Poland’s energy independence, as it will allow for the delivery of gas from virtually any direction (for example – North America). With a regasification capacity of 5 billion cubic metres per year, the terminal will be able to supply quantities equivalent to over half of Poland’s annual imports from Russia. This will not only change Poland’s position in negotiations with Russia, but also affect the entire regional gas market.
The LNG terminal allows for further expansion of LNG in Europe. In future, Poland will be able to export LNG to landlocked countries. The Polish Prime Minister (Mrs Beata Szydło) stated that Poland may consider building a second LNG terminal on the Baltic Sea in order to further improve energy security. Experts (such as Andrzej Bobiński – energy expert of the think tank Polityka Insight in an interview with Puls Biznesu) claim that now the problem is that Poland will have too much gas instead of not enough. The real question is what will Poland do with it.
Any questions? Please contact: Paweł Żelich or Bartosz Ostrowski
Practice Group: Energy