Poland eyes expanding LNG terminal to increase energy security

[WARSAW] Poland plans to expand a new liquefied natural (LNG) gas terminal aimed at bolstering energy security and easing dependence on Russian supplies, the chief executive of gas utility PGNiG said on Tuesday.

State-controlled PGNiG and Polskie LNG, the company building the terminal on the Baltic port of Swinoujscie, have signed a letter of intent to build a third gas storage unit on the site, the companies said in a joint statement.

"The gas terminal in Swinoujscie is one of the investments which will enable diversification of gas supplies," PGNiG's Chief Executive Mariusz Zawisza said. "Its expansion will increase our market chances and significantly increase the country's energy security."

The US$3 billion terminal in Swinoujscie - initially able to accept 5 billion cubic metres (bcm) annually - is scheduled to come on stream next year and will import gas from Qatar.

A third storage tank could boost capacity to 7.5 bcm, the head of Poland's gas grid told Reuters last month, adding that market interest justified the expansion.

Poland and other central and southeast European countries get most of their gas from Russia and want to cut dependence on their former Soviet master, particularly as the crisis between Ukraine and Russia could threaten deliveries this winter.

However, Poland's bid to boost energy security by building the LNG terminal comes at a cost. It has contracted to import 1.6 bcm of gas a year from Qatar for 20 years, a deal that could saddle it with some of the highest prices in the world.

The government approved the terminal in 2008, and construction started in 2011. The project's original timeline has been pushed back several times, but the facility is expected to open in the first half of 2015 without any further delays.

REUTERS