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SEPTEMBER 2020

Polish Crusade Against Nord Stream 2 Leads To 20-year Contract For LNG Deliveries From US

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Polish Crusade Against Nord Stream 2 Leads To 20-year Contract For LNG Deliveries From US

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On October 17th, Polish state-run gas company PGNiG announced that the country had signed a 20-year contract for deliveries of two million tonnes of liquefied natural gas (LNG) per annum from the US.

The contract was signed with US company American Venture Global LNG and would equal about 2.7 billion cubic meters per year after regasification, according to Management Board President Piotr Wozniak of PGNiG.

“We will be receiving two million tons of LNG annually from the US for 20 years,” Wozniak told reporters.

He also clarified that the LNG would be supplied on a free-on-board (FOB) basis. This basically means that the Polish side will be responsible for transport and logistics of the cargos.

No price was disclosed, but Wozniak claimed that the LNG from the US would be almost 30% cheaper than Russian natural gas.

Poland’s energy ministry, Krzysztof Tchorzewski, said the deal would help Poland diversify its gas supplies. “In the Polish context, this gas is a civilisational good,” he said.

Meanwhile, the Polish Prime Minister Mateusz Morawiecki has stated that US LNG would “boost” the country’s “sovereignty,” as well as its “competitiveness.”

“Our predecessors wanted to sign a deal with Gazprom until 2037. It would be gas handcuffs,” Morawiecki claimed. In contrast, signing a 20-year deal with a US company is in no way restrictive for Poland. Currently, PGNiG imports up to 10 billion cubic meters of gas per annum from Russia’s Gazprom under a contract that is due to expire in 2022.

In June, PGNiG signed a memorandum of understanding with US Port Arthur LNG and Venture Global LNG for LNG deliveries with the aim of diversifying suppliers.

“Purchasing of liquefied natural gas in the USA will not only allow further diversification of our import portfolio following 2022, but will also let us develop our trading competences and enable PGNiG’s presence as a global LNG market player,” PGNiG’s CEO was cited in his June statement.

In an interview with Polish news network TVP1, former Polish Defense Minister Antoni Macierewicz claimed that cooperation between Germany and Russia on Nord Stream 2 damages Warsaw’s interests.

“Germany pursues a policy of alliance with Russia and they jointly want to tighten the noose around our neck with the help of Nord Stream 2. They want to strangle both Poland and Central Europe, and forever make them dependent on their own economic and political power,” Macierewicz said.

He further commented that Poland can only remain an independent state if permanent US military bases are deployed in the country and if the Nord Stream 2 is never implemented. According to the former Defense Minister, both of these are key objective of Warsaw’s foreign policy. “We must understand that only the United States is lending support to Poland on these issues,” he noted.

Macierewicz also emphasized the importance of the Open Society Foundations of US billionaire George Soros, which, according to him, Warsaw resolve these two problems.

There are no economic facts or numbers presented to prove that buying US LNG is cheaper or makes more economic sense than buying Russian natural gas. It is apparent that the decision to “diversify gas suppliers” is not an economic one, it is a political one.

On October 8th, deputy spokesman Martina Fietz of the German government said that Berlin considers the Nord Stream 2 project a rational one. “We export gas from different countries, from Russia, and from the United Kingdom, Norway and the Netherlands as well. Germany’s demand for natural gas will… increase in the coming years and the Nord Stream 2 is among the projects that the German government considers to be quite rational,” she said.

Even earlier, German Economic Affairs and Energy Minister Peter Altmaier praised Nord Stream 2, saying it’s a project which “proved itself.”

“I want that private initiative, those initiatives that are aimed at (enhancing) energy security and growth to be successful,” he said.

In February 2018, German Chancellor Angela Merkel said that Germany considers the Nord Stream 2 project an economic one, that does not pose a threat to diversification of supplies.

Nord Stream 2 is a joint venture between Gazprom, France’s Engie, Austria’s OMV AG, UK-Dutch Royal Dutch Shell, and Germany’s Uniper and Wintershell. US State Department has threatened to sanction Western companies that are involved in the venture. So far, no sanctions have been imposed.

The US is a strong opposer of the Nord Stream 2 and it seeks to promote its LNG in Europe as an alternative to Russian gas. Thus, Poland is in a way a proxy of US interest aimed at attempting to pressure Europe. Washington will keep attempting to increase its energy sales to Europe, despite the US projects being costly. The US also aims to deter any kind of EU-Russian cooperation in the energy sector whatsoever.

The two end objectives of the US policy in this matter are simple: the Trump Administration aims at impacting the economy of its “geopolitical competitor” in the face of Russia and to increase its own influence in the region, while Russia’s own influence wanes.

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