The Polish energy company PGNiG has agreed with its Ukrainian partners to supply American liquefied natural gas to Kiev. This was reported on the PGNiG website.
The Polish Oil and Gas Company (PGNiG) purchased a shipment of liquefied natural gas from the United States, and then - after regasification - sold gas to Ukraine’s Energy Resources (ERU). Consistent expansion of the LNG supply portfolio allows PGNiG to offer gas to a wide range of customers, ”the company said in a statement.
According to the gas supplier, the first batch of LNG intended for Ukraine will arrive in the tanker from the United States in November of this year. Delivery volumes are not specified.
After regasification in Poland, fuel will begin to flow to Ukraine. The head of PGNiG Pyotr Wozniak emphasized that his company is ready to supply large volumes of gas to this country.
“At the moment, the only limitation in the development of even larger-scale exports to Ukraine is the throughput capacity of gas pipelines in Poland in the Silesia-Carpathian region. We expect an increase in the capacity of these pipelines at the latest by 2021, ”notes Wozniak.
The head of the Energy Resources of Ukraine corporation, US citizen Dale Perry, in turn, pointed out the geopolitical importance of this supply.
“ We maintain our reputation as pioneers in fulfilling the most daring tasks in the regional energy sector. Thanks to cooperation with our Polish partner, we are making significant progress in building a transatlantic gas supply corridor from the USA to Ukraine, ”said Dale Perry.
“There is no economic sense”
In May 2019, President of Ukraine Vladimir Zelensky, head of Naftogaz Andrey Kobolev, and US Secretary of Energy Rick Perry discussed plans for the supply of American gas to Ukraine through Poland. In turn, the representative of the Polish government on strategic energy infrastructure Pyotr Naimsky in June announced Warsaw’s readiness to launch a gas pipeline with a capacity of 2 billion cubic meters for gas supplies to Ukraine.
- President of Ukraine Volodymyr Zelensky and US Secretary of Energy Rick Perry
- Reuters
- © Mykola Lazarenko / Ukrainian Presidential Press Service
According to experts, for the Ukrainian leadership, gas purchase projects in Poland are primarily of political importance. Thus, Kiev shows its alleged "independence" from Moscow.
“For Ukraine, this project does not make economic sense. This is an exclusively political act, said Andrei Frolov, deputy director of the National Energy Institute, in an interview with RT. “For Ukraine, this is just PR.”
At the same time, the expert noted that such PR is not accompanied by a real rejection of Russian gas. So, even under Petro Poroshenko, Ukraine officially stopped buying this type of hydrocarbon in the Russian Federation. In fact, she continues to buy gas of Russian origin, but passes it off as European.
As noted by Andrei Frolov, the gas pipeline in Germanovitsy, which they decided to build in 2016, was not completed from the Ukrainian side, as the Poles reported in June. However, information had already been received on the allegedly available gas supplies from Poland to Ukraine. According to the expert, such deliveries could occur only by netting.
“Some money was allocated and spent, but Ukraine has not completed its part of the homework for the construction of the pipeline,” Frolov said. - Virtual deliveries were made. That is, a certain volume of gas was taken, and the counterparty, to whom the pipe was not laid, paid money for this gas, but took it from another source. ”
However, as the expert emphasized, such a scheme is workable if Russian gas is supplied through Ukraine, which can be selected and given as American gas supplied from Poland.
Problem volumes
Back in November last year, PGNiG signed a 24-year contract with the American company Cheniere Marketing International LLP for the supply of liquefied gas. According to the document, in 2019–2022, an American company should supply the Poles with volumes of liquefied fuel equal to about 0.7 billion cubic meters of gas, and in 2023–2042 - 39 billion cubic meters. The contract with another American company Venture Global LNG, which was reported a month earlier, provides for the supply of gas in the amount of 2.7 billion cubic meters over 20 years.
In February 2019, the U.S. ambassador to Warsaw, Georgette Mosbacher, announced that the U.S. intends to supply Poland with 7.5 billion cubic meters of gas per year under contracts signed by the Polish side. In June, during a visit to the United States by Polish President Andrzej Duda, he agreed with his American counterpart Donald Trump to buy 2 billion cubic meters of liquefied natural gas.
At the same time, in October 2018, PGNiG reported that in 2017, the country consumed 17 billion cubic meters of gas. 74% purchased from Russia. Experts point out that now there is not enough American gas to cover the needs of Poland itself. In addition, 2 billion cubic meters of throughput of the pipeline that has not yet been built between Poland and Ukraine is extremely small for Kiev.
- Gas compressor station in Ukraine
- Reuters
- © Gleb Garanich
“Two billion cubic meters is only 20% of the volume of imported gas that Ukraine needs now,” says Andrey Frolov. - Where will they get the rest in case of conflict with Russia and problems with transit? The physical supply of LNG to Ukraine and the virtual supply of reverse gas from Europe will be very problematic. ”
Warsaw plans
As political analyst Alexander Asafov noted in an interview with RT, Warsaw seeks to improve its status in Europe, becoming the main distribution point for American liquefied natural gas on the continent.
“The Americans have very ambitious plans to capture the European gas market. Related to this is such tension in US-Russian relations and pressure on participants in the Nord Stream 2 project. Terminals are being built for transporting liquefied natural gas, including in Poland. And Poland wants to compete with Germany, wants to become the new European gas hub, the supplier of American liquefied natural gas, ”Asafov said in an interview with RT.
The expert emphasizes that in exchange for loyalty, Warsaw hopes for a discount on American gas, which it can then resell with profit. Including Ukraine. Earlier, Peter Wozniak said that the United States will sell gas to Poland almost 30% cheaper than it buys from Russia.
Andrei Frolov notes that the Polish company is simply misleading its consumers.
“Their statement is based on one simple fact - the contracts are signed under FOB (Free On Board - a term meaning free delivery of goods by ship. - RT ), that is, this is the price when loading LNG from the plant to a methane truck. In fact, they are talking about the price that they will pay directly to the LNG producing company. Shipping costs by sea are not included. Gasification costs are not taken into account. Gas transportation costs to consumers within Europe are not taken into account. Taxes are not taken into account. In fact, they compared completely incomparable things, since the price that Gazprom calls includes the above factors (transportation costs and taxes), ”the expert notes.
According to the expert, Poland needs to find a country that would buy American LNG from it, since it is too expensive for the country.
“There were no such neighbors, except for one country - Ukraine.”
Suspicious Schemes
PGNiG is Poland’s largest oil and gas company, most of which is owned by the state. Her partner in Ukraine, on the contrary, is a private company, “Energy Resources of Ukraine” (ERU). At the beginning of 2019, ERU was among the five largest private importers of natural gas to Ukraine.
Earlier, Andrei Favorov was listed as a co-owner of the company, who in November 2018 was appointed the head of a subsidiary of the Ukrainian state giant Neftegazsbyt. The Ukrainian media reported on Favorov’s US citizenship, ties to oligarch Rinat Akhmetov, and friendship with the head of Naftogaz Andrey Kobolev.
- Andrey Favorov
- © ERU
The ERU has been repeatedly accused of involvement in corruption schemes. In particular, Naftogaz’s executive director, Yuri Vitrenko, previously argued that due to Favorov’s actions, Naftogaz was selling ERU gas at a price lower than the market. In July, Andrei Dubinsky, a journalist for 1 + 1 TV channel, accused the company of fraud in the purchase of electricity.
Earlier, the ERU said it had implemented the “first-ever import” of electricity from Slovakia and Hungary. According to Dubinsky, in fact, Ukrainian consumers bought their own electricity, but with a European margin.
According to Andrei Frolov, Ukrainian partners of the Poles can really crank out such schemes.
“The gas market is designed in such a way that it is possible to buy some goods off-net. There are economic instruments that allow such operations to be carried out, ”the expert notes.
Alexander Asafov agrees with the thesis about a possible corruption component in the plans for gas supplies from Poland.
“I think that all these accusations are fair, but it’s too early to talk about how this situation will actually develop. There are no supplies yet, these are just words. Now this is the position of extreme populism, which is absolutely not a fact that will be realized. Considering how the ERU company worked earlier, it’s not a fact that it will immediately change its methods and techniques, becoming a supplier of American gas, ”the political scientist believes.