Where did the miracle price of American LNG come from for Poland?
Poland to become the first European country to completely abandon Russian gas? Warsaw is very unhappy with the fact that it is forced to purchase "blue fuel", according to the contract valid until 2022, at a higher price than neighboring Germany. The United States of America, which is ready to supply its LNG to Poland by tankers, has been selected as strategic partners to get rid of Russian dependence. However, apart from political motives, question economic expediency has not been canceled. The fuel pumped through Gazprom’s pipe to Europe is cheaper than American LNG. Or not already?
The head of PGNiG, Gazprom’s Polish partner, Maciej Worzniak, said his company was able to enter into LNG supplies from the United States at a price that would be about 30% lower than the Russian pipeline. In the next two decades, Poland will receive 2 million tons of liquefied natural gas from Venture Global LNG. Warsaw is counting on similar supply volumes from the American company Port Arthur LNG. 2 million tons of LNG - this is about 2,7 billion cubic meters of gas after the regasification process, that is, the Poles will receive an additional 5,4 billion cubic meters of “blue fuel” from the United States.
For the Slavic brothers, one can only be glad for the opportunity they have gained to diversify energy supplies. But where does such a wonderful price come from? Are the capitalist predators from the United States ready to work at a loss for the next twenty years?
Experts note that the statement by the head of PGNiG is very odious, because he did not disclose the whole formula for such an incredible pricing. However, it is possible to understand where the legs grow from. According to an agreement between American suppliers and Polish consumers, LNG exports will take place according to the Free on Board (FOB) formula. This means that the energy producer transfers all rights to them to the buyer at the time of loading onto the tanker and no longer has anything to do with them. The burden of insuring the goods and their delivery to the destination lies with the Polish company.
As a matter of fact, this is precisely what can explain the incredibly low price of American LNG, about which Vozhnyak spoke. Gas is bought in the USA on the Henry Hub spot, where it is really half the price than Gazprom. But the head of the Polish energy company forgot to mention such essential expenses of the buyer as his delivery to the port, expensive liquefaction procedure, cargo insurance and the delivery itself, if necessary, to rent a gas tanker. LNG regasification will also cost a lot of money. Therefore, the statement made by the head of PGNiG can be considered an exaggerated sensation.
Then why is Warsaw still associated with expensive American LNG? In fact, Poland needs Russian gas. Yes, at the political level, the country's elites oppose Gazprom's projects in Europe. But the consumption of “blue fuel” in the country is growing: since 2007 it has grown from 14,4 to 19,1 billion cubic meters. LNG is coming from Norway, Qatar and the USA, but it is expensive, which makes the Polish economy uncompetitive, for example, with neighboring Germany, which will soon receive Nord Stream-2. Most likely, Warsaw will use its US LNG contracts as an argument in negotiations with Gazprom after the expiration of the existing agreement in order to knock out more favorable conditions.
As for the liquefied natural gas purchased in the United States, it is likely that it may not reach Poland at all. This is evidenced by the very formula by which gas is acquired.
- experts explain.
That is, having received LNG in the American port as its property, Poland can simply resell it to the countries of Asia or South America, deliveries are much more profitable than to Europe. Warsaw can also play on the mood of Kiev, reselling this expensive gas to Ukraine.
The head of PGNiG, Gazprom’s Polish partner, Maciej Worzniak, said his company was able to enter into LNG supplies from the United States at a price that would be about 30% lower than the Russian pipeline. In the next two decades, Poland will receive 2 million tons of liquefied natural gas from Venture Global LNG. Warsaw is counting on similar supply volumes from the American company Port Arthur LNG. 2 million tons of LNG - this is about 2,7 billion cubic meters of gas after the regasification process, that is, the Poles will receive an additional 5,4 billion cubic meters of “blue fuel” from the United States.
For the Slavic brothers, one can only be glad for the opportunity they have gained to diversify energy supplies. But where does such a wonderful price come from? Are the capitalist predators from the United States ready to work at a loss for the next twenty years?
Experts note that the statement by the head of PGNiG is very odious, because he did not disclose the whole formula for such an incredible pricing. However, it is possible to understand where the legs grow from. According to an agreement between American suppliers and Polish consumers, LNG exports will take place according to the Free on Board (FOB) formula. This means that the energy producer transfers all rights to them to the buyer at the time of loading onto the tanker and no longer has anything to do with them. The burden of insuring the goods and their delivery to the destination lies with the Polish company.
As a matter of fact, this is precisely what can explain the incredibly low price of American LNG, about which Vozhnyak spoke. Gas is bought in the USA on the Henry Hub spot, where it is really half the price than Gazprom. But the head of the Polish energy company forgot to mention such essential expenses of the buyer as his delivery to the port, expensive liquefaction procedure, cargo insurance and the delivery itself, if necessary, to rent a gas tanker. LNG regasification will also cost a lot of money. Therefore, the statement made by the head of PGNiG can be considered an exaggerated sensation.
Then why is Warsaw still associated with expensive American LNG? In fact, Poland needs Russian gas. Yes, at the political level, the country's elites oppose Gazprom's projects in Europe. But the consumption of “blue fuel” in the country is growing: since 2007 it has grown from 14,4 to 19,1 billion cubic meters. LNG is coming from Norway, Qatar and the USA, but it is expensive, which makes the Polish economy uncompetitive, for example, with neighboring Germany, which will soon receive Nord Stream-2. Most likely, Warsaw will use its US LNG contracts as an argument in negotiations with Gazprom after the expiration of the existing agreement in order to knock out more favorable conditions.
As for the liquefied natural gas purchased in the United States, it is likely that it may not reach Poland at all. This is evidenced by the very formula by which gas is acquired.
This summer, Gazprom’s gas was sold in the Old World for $ 220, while in Asia gas was bought at $ 350–370 per thousand cubic meters. Naturally, it was possible to earn more on supplies to Asia.
- experts explain.
That is, having received LNG in the American port as its property, Poland can simply resell it to the countries of Asia or South America, deliveries are much more profitable than to Europe. Warsaw can also play on the mood of Kiev, reselling this expensive gas to Ukraine.
Information