Without Russian supply, Poland looks to US LNG and Norwegian gas

Starting with the first cargo delivered in 2017, LNG imports from US producers have helped Poland reduce its dependence Russian gas. With Russian pipeline gas imports halting in 2022, PKN Orlen’s LNG imports jumped more than 50% year-on-year as the Polish energy company looked to ensure the country’s energy security, with US exporters playing a pivotal role.

LNG and pipeline deliveries from Norway and Lithuania accounted for over 50% of all gas imported by Poland’s PGNiG, with almost 25% coming from the US, according to PKN Orlen.

These increased LNG and gas imports were underpinned by increased offtake capacity at the President Lech Kaczyński LNG terminal in Świnoujście, Poland, and new cross-border connections, including the Baltic Pipe running between Poland and Norway, where the Orlen Group owns gas assets.

Accelerating the urgency of these new sources of natural gas was the suspension of Russian gas imports in April 2022. Gazprom halted pipeline transmissions on 27 April, after PGNiG rejected its demands to change the settlement currency under the Yamal contract to the rouble, which was in violation of the contract’s provisions.

At 2.90 billion cubic metres (bcm), gas imports from Russia accounted for about 20% of the total, down from 9.90 bcm or 61% in 2021.

To alleviate energy shortages caused by its pivot from Russian gas, Poland increased imports of LNG, signed contracts for the purchase of Norwegian gas, and began importing gas from Lithuania and Slovakia, notes PKN Orlean chief executive and management board president Daniel Obajtek.

“Looking ahead, 2023 will be the first full year without any gas imports from Russia, which will be replaced by deliveries via the Baltic Pipe and LNG supplies under long-term contracts with US-based producers,” says Mr Obajtek.

In 2022, LNG was a significant part of PKN Orlen’s gas imports. At 6.04 bcm, LNG deliveries accounted for as much as 43% of the group’s total imports – a more than 50% increase from 2021, when LNG deliveries amounting to 3.94 bcm represented 24% of all gas supplied to PKN Orlen. The surge in LNG imports was a response to the European gas crisis resulting from the Russia-Ukraine war. The group in particular increased LNG deliveries from the US, which totalled approximately 3.40 bcm after regasification in 2022.

In 2022, the Baltic Pipe and the Poland-Lithuania and Poland-Slovakia interconnectors allowed the Orlen Group to import about 1.26 bcm of natural gas from these new sources, accounting for roughly 9% of the company’s total imports.

Launched in Q4 2022, the Baltic Pipe allows gas imports from the Norwegian Continental Shelf, where Orlen holds 98 licences and produces hydrocarbons from 17 fields.

In May 2022, the Poland-Lithuania Gas Pipeline was placed in service, enabling Orlen to import 0.55 bcm of natural gas from the Klaipėda regasification terminal, which received eight LNG cargoes starting in May 2022.

Another new source of supply was established through an interconnector with Slovakia, from which Orlen imported 0.03 bcm of gas in 2022.

The total volume of the Orlen Group’s gas imports in 2022 was 13.91 bcm, down 14% year-on-year, which was primarily attributable to lower demand from Polish customers. Poland’s Ministry of Climate and Environment estimated that gas consumption in country in 2022 fell by 17% year-on-year.