14:54 GMT +318 October 2018
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    The LNG tanker Clean Ocean is pictured during the first U.S. delivery of liquefied natural gas to LNG terminal in Swinoujscie, Poland June 8, 2017

    Warsaw Wants to Become US Gas Hub, Forgets Fate of Similar Project in Lithuania

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    Poland is looking to sign a long-term contract for the supply of liquefied natural gas (LNG) from the US. Speaking to Sputnik, energy policy expert Yuri Solozobov suggested that if Warsaw is hoping to get something for nothing from Donald Trump, it has miscalculated.

    Speaking to reporters after his meeting with US President Donald Trump on Thursday, Polish President Andrzej Duda said that he was "convinced" that his country could become a European hub for US LNG supplies. The president noted that he was looking to sign a long-term contract for US gas "in the near future," thereby allowing Poland to diversify its gas supplies.

    Earlier, at his joint press conference with the Polish president, US President Donald Trump quipped that the US "can enter a contract for LNG within the next 15 minutes…You know, we are becoming a great exporter of energy."

    The US delivered its first LNG shipment to Poland last month. Last week, Polish Foreign Minister Witold Waszczykowski indicated that Warsaw was looking to diversify its imports of gas from Russia by reaching a deal with the US on shale gas deliveries. 

    Poland is currently one of the largest European buyers of Russian natural gas. According to Russian energy giant Gazprom, Poland imported 11.07 billion cubic meters of Russian natural gas in 2016, or about 6% of the country's total exports to non-Commonwealth of Independent States countries.

    Commenting on Warsaw's plans, Yuri Solozobov, the head of the International Energy Policy research center, told Sputnik that another Eastern European country had already imagined itself becoming an LNG hub – Lithuania.

    "The Norwegians floated over their energy terminal vessel, the FSRU Independence, and the Lithuanians thought that everything would start rolling, that everything would be great. And then the gas turned out to be at least 30% more expensive than its Russian equivalent. Lithuania had planned to become a hub for the whole of Europe, but eventually the project died quietly," Solozobov said.

    Klaipedos Nafta, operator of Lithuania's LNG terminal, has been reporting a steady drop in operations in recent months. Talk of re-exporting supplies delivered to the country ended 2015, a year after the LNG terminal began its operations.

    This first liquefied natural gas (LNG) terminal Independence comes through the sea gate port of Klaipeda on October 27, 2014
    © AFP 2018 / PETRAS MALUKAS
    This first liquefied natural gas (LNG) terminal "Independence" comes through the sea gate port of Klaipeda on October 27, 2014

    According to Solozobov, Poland seems to be hoping that the US will become a sponsor for its Trojmorze ('Three Seas') infrastructure project, which Warsaw sees as a tool for deepening Eastern European states' broader integration into the European Union via logistics, energy security, and infrastructure projects.

    But that project's real aim is political, not economic, according to the analyst.

    "Poland wants to be the second, alternative center of Europe, alongside Germany. They have tremendous ambitions to become the leader of a new bloc," (Trojmorze), Solozobov noted.

    "This project is impossible without an external sponsor. Previously, it was thought that NATO would be the sponsor, building infrastructure and helping out in other ways. But now the survival of the alliance is in question: it is not known who will finance it and how. As a result, the Trojmorze project began to be presented as an energy and infrastructure project – a counterbalance to the supply of gas along the 'east-west' lines via a 'north-south' line. This, of course, is beneficial to US oil and gas corporations, and to Trump as their lobbyist. It is also profitable to the ruling elite among the current ruling party in Poland."

    Nevertheless, economic analysts have confirmed that politics aside, it will be next to impossible to make US LNG acceptable to consumers – unless they are looking forward to an increase in prices. 

    RIA Novosti political observer Vladimir Ardaev recently wrote that gas shipped by pipeline has a distinct advantage over LNG: price. The formula is very simple, he noted: "If the cost of pipeline-pumped gas at the point of delivery consists of the cost of its extraction plus delivery to its destination, the cost of LNG consists of delivering the gas to the point of liquefaction, the liquefaction process itself, transportation by sea, regasification, and then pumping to the consumer."

    In other words, President Trump and US energy companies certainly aren't going to turn away from a chance to turn Polish animosity toward Moscow into a profitable business. Still, it's unclear just why other European countries would want to buy US gas via Poland if it costs significantly more than the Russian alternative. It's also uncertain if Polish consumers themselves will be willing to see their utilities prices go up for the sake of sticking it to the Russians. 

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    Tags:
    natural gas, LNG, Andrzej Duda, Donald Trump, Poland, United States, Russia
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