First Delivery of LNG for PGNIG to Klaipeda LNG Terminal

Source: 5/6/2022, Location: Not categorized

The PGNiG Group received its first cargo of liquefied natural gas to be delivered to the LNG terminal in Klaipeda, Lithuania. The delivery of almost 65,000 tonnes of LNG from the US is a step towards further integration of gas markets in this part of Europe and strengthening of their energy security.

The LNG carrier Aristidis I brought a cargo of about 65,000 tonnes or 150,000 cm of LNG to the Klaipeda terminal, which is equivalent to almost 90 mcm of natural gas after regasification. The gas came from a liquefaction plant in Freeport, in the US state of Texas.

“The first delivery of liquefied natural gas received by PGNiG at the regasification terminal in Klaipeda is an important milestone in the implementation of our strategy to build a strong position for the Group on the international LNG trading market. I believe that the cooperation between the PGNiG Group and Klaipedos Nafta, the terminal operator, will not only further the two companies’ business goals but will be a strong impulse for further integration of the gas markets of Poland and the Baltic States, increasing the region’s energy security based on diversified gas fuel supplies,” said Iwona Waksmundzka-Olejniczak, President of the PGNiG S.A. Management Board. “Strengthening of our presence in Lithuania is also part of our plans to build a multi-utility group with PKN ORLEN, which is dynamically developing its business in this region as well,” she added.

The KN (Klaipedos Nafta, AB) operated LNG terminal is one of the key elements of Lithuania's energy infrastructure. Its launch in 2014 paved the way for the emergence of a natural gas market in Lithuania, diversification of gas supply sources, and improvement of energy security across the region.

“This week’s developments, including the launch of Polish-Lithuanian gas pipeline interconnector GIPL on May 1st and the arrival of the first large PGNiG cargo to Klaipeda LNG terminal on Friday, are significant milestones in the history of Lithuanian and Polish energy independence and security of gas supply. At the same time, it also marks a new stage in the energy integration of the Baltic Sea region countries with a rest of Europe and more opportunities to diversify and secure natural gas supply especially in the context of current difficult geopolitical conditions. I’m glad that cooperation with PGNiG, which started more than two years ago, today is expanding significantly by creating additional opportunities for both counterparties,” said Darius Šilenskis, CEO of KN.

LNG brought for PGNiG by the LNG carrier Aristidis I will be reloaded into the tanks of the floating storage and regasification unit ‘Independence’ at the LNG terminal in Klaipeda, and then regasified and transferred to the transmission system. This is particularly important in view of the steps being taken by countries in the region to become independent of Russian gas supplies, as well as Gazprom's discontinuation of gas deliveries to Poland.

Gas from the first cargo received by the PGNiG Group in Klaipeda will be supplied not only to the Polish market, but also to the Baltic State. Elenger, one of the major energy companies in the Finnish-Baltic region, has bought part of the LNG delivery for their customers.

“Cooperation helps to overcome difficult and revolutionary times on the European energy market. Being one of the fastest growing energy companies in the Baltic Sea region and an experienced LNG competence and infrastructure developer, Elenger is very happy to have found a strong partner in PGNiG, with whom we can deliver and transfer LNG to the region in order to improve gas supply security,” said Margus Kaasik, the head of Elenger group.

PGNiG has a diversified LNG procurement portfolio. It has signed long-term contracts for a total volume of 12 bcm of LNG (after regasification) with suppliers from Qatar and the US. Of that, 7.4 bcm will be delivered on the Free on Board (FOB) basis, where the destination port is selected by PGNiG. Futures contracts are complemented by spot purchases, including under FOB contracts. In order to increase its potential on the LNG market, PGNiG is developing its own fleet of LNG carriers. By the end of this year, the Company will have three vessels, each with a capacity of approximately 160,000 cubic meters. Two of these will be available by mid-year, and the third in the second half of 2022. In addition, PGNiG has signed long-term charter contracts for eight LNG carriers to be built specifically for the Company's needs. The first will be put in service in 2023.

The cooperation between PGNiG and KN involving LNG started two years ago. Since April 2020, PGNiG has been the sole user of the KN-owned LNG reloading station at the port of Klaipeda, from where gas is supplied to customers in liquefied form by LNG trucks.

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