Logistics And Frieght Forwarding

US LNG cargoes arrive in Poland, Netherlands, first into northern Europe

The first two US LNG cargoes to reach northern Europe have now landed in Poland and the Netherlands, marking a historic new chapter in the US LNG export sector that began with the first Lower 48 deliveries to world markets in February last year. The Clean Ocean and Arctic Discoverer, which both departed the Sabine Pass LNG export facility last month, arrived late Wednesday and early Thursday at Poland’s Swinoujscie port and the Dutch Gate terminal respectively, according to cFlow, Platts trade flow software. US LNG exports began in February last year, but before Wednesday no cargoes had landed in the liquid hubs of northwest Europe or elsewhere in northern Europe, faced with competition from domestic supply and cheap imports from Norway and Russia.

PGNiG said Thursday that the volume of its cargo into Swinoujscie — a pure spot deal done between Sabine Pass operator Cheniere Energy and PGNiG in May — would be 95 million cu m of gas after regasification. REGIONAL SIGNIFICANCE The cargo could be the first of many, with Poland positioning itself as a import hub for onward delivery to other eastern European countries.

“This delivery shows that Poland can successfully serve as a gateway for US LNG to our part of Europe,” PGNiG CEO Piotr Wozniak said in a statement. “Our growing participation in the LNG market and the purchase of gas from the US is the result of our strategy of diversifying gas supply sources for Poland,” he said. Polish Prime Minister Beata Szydlo said she hoped for “further and more effective cooperation” with the country’s US partners, saying the delivery would be “one for the history books.”

The US Department of State also heralded the delivery. “The US congratulates Poland on this significant step to diversify its own sources of energy and to strengthen Europe’s energy security,” said spokeswoman Heather Nauert. The Polish import terminal began commercial imports in mid-2016 as part of the country’s plans to reduce its dependence on Russian gas imports, which last year accounted for 89% of all PGNiG’s imports.

The US cargo was the 14th commercial delivery, with 12 of those cargoes deliveries from Qatargas as part of a 20-year supply contract with PGNiG. Statoil also delivered one spot cargo in June last year. PGNiG’s long-term contract with Gazprom for up to 10.2 Bcm/year of gas is due to expire in 2022 and the Polish company wants to have alternative sources of supply to improve its bargaining position once negotiations for the renewal of the Gazprom contract open in 2019.

PGNiG officials have also said the contract may not be renewed if plans to tap Norwegian gas via the Baltic Pipe project go ahead. GATE CARGO The delivery aboard the Arctic Discoverer to Gate, meanwhile, was likely a replacement cargo for Statoil given that its Norwegian Snohvit LNG facility is down for maintenance from May 12 to June 18.

Its volume was 82.6 million cu m of gas post-regasification, according to Platts Analytics’ Eclipse Energy. A spokesman for Statoil told S&P Global Platts that to meet contractual commitments the company sometimes sources LNG in the market when it optimizes its operations. He said the US LNG was a cargo sourced in the market to meet contractual obligations to a counterparty.

Analysts had said they doubted whether US LNG would find a home in northwest Europe in the short term given the competition from traditional suppliers, but it was expected that, as the global LNG market became increasingly oversupplied through 2017, cargoes of US LNG would eventually come to Europe given its role as market of last resort. However, there do not seem to be any other cargoes headed for northern Europe, so the two arrivals into Swinoujscie and Gate do not necessarily signal the start of a wave of LNG flows from Sabine Pass to the region. Since exports of US LNG from Sabine Pass began, a number of cargoes have landed in southern Europe, with Spain taking four cargoes, Portugal three, Italy one and Malta one.

Another cargo — carried from Sabine Pass aboard the Ribera Del Duero Knutsen — is currently headed for Portugal and is due to arrive on June 13, according to cFlow.
Source: Platts[1]

References

  1. ^ Platts (www.hellenicshippingnews.com)



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