LNG in Poland and Europe 2016

Conference report LNG in Poland and Europe 2016

On June 20, 2016, in Warsaw, the 5th edition of the conference “LNG IN POLAND AND EUROPE 2016” took place.

The conference is the most important event dedicated to the development of the LNG market in Poland and the Baltic Sea region. In 2016, the event coincided with the operational opening of the LNG terminal in Świnoujście.

OPENING OF THE LNG TERMINAL – BUILDING THE BALTIC GAS HUB AND THE ENERGY SECURITY OF THE REGION.

The first part of the conference focused on discussing the significance of the opening and the role of the LNG terminal for the energy security of Poland and Central and Eastern Europe.

In the opening speech, the Government Plenipotentiary for Strategic Energy Infrastructure, Mr. Piotr Naimski, emphasized the historic importance of the terminal’s opening: gas from the terminal is the first gas not originating from Russia. Minister Naimski pointed out that diversification of sources and routes of gas supply is a key element of Poland’s energy security strategy. Imports via the terminal can meet one-third of Poland’s demand, which, combined with the planned construction of the northern gas pipeline, should lead to independence from Russian supplies by 2022, when the long-term contract with Gazprom expires.

Mr. Michał Kurtyka, Undersecretary of State at the Ministry of Energy, noted that the main challenge now is ensuring the terminal’s profitability. He discussed ongoing work on a new network code, plans to increase the terminal’s functionality, and the range of services provided. Minister Kurtyka predicted that global LNG prices would equalize with pipeline gas prices within a few years. He emphasized that the LNG market is transitioning from a producers’ market to a customers’ market, and that the link between gas prices and oil value is being abandoned. LNG is becoming a more common commodity, and political pressure resulting from supply monopolization will gradually diminish, he forecasted.

Mr. Maciej Woźniak, Vice President of the Management Board of PGNiG S.A., discussed the importance of the LNG terminal and LNG trading in PGNiG’s strategy. He announced that PGNiG S.A. aims to become not only a company ensuring security of supply but also a competitor on the domestic and international gas markets. The Vice President also announced the launch of an international trading office and the company’s participation in global LNG trading.

Mr. Paweł Jakubowski, Director of the Development Division at GAZ-SYSTEM S.A., presented the current parameters, technical capabilities, and service portfolio of the LNG terminal in Świnoujście. He also discussed plans to expand the terminal’s regasification capacity and preliminary analyses regarding the construction of a second floating LNG terminal in the Gulf of Gdańsk.

Mr. Marcin Sienkiewicz, Director of TGE Hub Polska at the Polish Power Exchange (TGE), spoke about the role of TGE in developing the LNG trading market.

LNG SUPPLIES IN THE BALTIC REGION AND GLOBAL LNG MARKET TRENDS.

The international part of the conference focused on the technical and economic conditions of LNG supplies to the Baltic Sea region in the context of global LNG market trends.

Mr. Peter Bjorland, Vice President of Statoil ASA, presented the benefits and advantages of cooperation with a reliable LNG supplier such as Norway’s Statoil.

Mr. Fred H. Hutchison, Managing Director of LNG Allies, discussed the conditions of transatlantic LNG trade and the risks associated with potential mismatches between U.S. production and export capacities after 2020.

Mr. Aurimas Martisaukas, Director at the LNG terminal in Klaipėda (Klaipedos Nafta AB), shared the first technical and commercial experiences from the operation of the floating LNG terminal in Klaipėda.

Mr. Uwe Bode, Managing Director of PST Supply and Trading, spoke about LNG trading on global markets, pricing models and trends, and the strategies of buyers and sellers.

THE DOMESTIC LNG MARKET – POSSIBLE APPLICATIONS, POTENTIAL, AND DEVELOPMENT BARRIERS.

The next part of the conference was devoted to discussions on the prospects for developing the so-called “small-scale” LNG market.

Mr. Henryk Mucha, President of the Management Board of PGNiG Obrót Detaliczny Sp. z o.o., presented the development strategy of the PGNiG Group in the LNG sector. He identified key segments in which PGNiG Obrót Detaliczny plans to expand LNG sales: construction of LNG refueling stations for trucks and cars along major transport routes in Poland, development of ship bunkering services in Baltic ports, and expansion of the regasification station network.

REGULATORY AND LEGAL CONDITIONS FOR LNG IMPORT AND TRADING.

The final part of the conference focused on regulatory and legal aspects of terminal and LNG market development. Attorney Adam Wawrzynowicz, Managing Partner at Wawrzynowicz & Partners law firm, presented the legal framework for potential support mechanisms for the LNG terminal.

Attorney Piotr Ciołkowski, Partner at CMS Cameron McKenna law firm, discussed issues related to licensing, tariffs, and LNG trading on the domestic market.

Main topics of the conference:

• The significance of the LNG terminal’s opening for Poland’s energy security and competition in the gas market;
• LNG terminals in Poland and Lithuania – their impact on the gas market in the Baltic region and Central Europe;
• The Świnoujście LNG terminal: technical and business conditions for cooperation with the terminal;
• LNG logistics infrastructure and the expansion of domestic and cross-border transmission networks;
• The LNG terminal and LNG trading in the development strategy of PGNiG S.A.;
• LNG supplies to the Baltic region in the context of global LNG trends (conditions of supply from the USA, Qatar, and Norway);
• Long-term contracts, spot and swap markets, price determinants – the architecture of the global LNG market;
• LNG trading on global markets – models and pricing trends, buyers’ and sellers’ strategies;
• The future of LNG in the region: gas hub, LNG exchange, FLNG in the Puck Bay, Russian terminals on the Baltic Sea;
• Financing the operation of the LNG terminal – regulatory and legal conditions for cost socialization;
• Regulatory and legal challenges of LNG import and trading in Poland and the region;
• The “small-scale” LNG market in Poland and Central Europe: trading, import, production, and distribution;
• Business applications of LNG (ship bunkering, transport, energy, refrigeration, etc.).

The conference brought together 80 participants (including numerous senior management representatives) from 33 companies in the gas, fuel, chemical, energy, maritime, and consulting sectors from Poland, Lithuania, Slovakia, Germany, Norway, Russia, Japan, Qatar, and the USA.

Reports and information from the conference appeared in major news agencies (PAP, Bloomberg, Reuters), industry portals (including wnp.pl, cire.pl, biznesalert.pl, energetyka24.com, gazeo.com, CNG-LNG.pl), economic sections of national newspapers (including “Dziennik Gazeta Prawna,” “Gazeta Wyborcza”), and international media outlets (including Germany, Russia, Czech Republic, Slovakia, Lithuania, Sweden, Norway, Ukraine, Turkey, and the USA).

The Platinum Partner of the conference was PGNiG S.A., and the Gold Partner was GAZ-SYSTEM S.A.

List of companies and institutions participating in the conference