Since 2006 Poland has been in talks with various LNG producers to allow it to diversify its gas supply and reduce its reliance on Russian gas provided by Gazprom.
Poland was caught up in a row between Russia and the Ukraine, which resulted in a reduction of gas supplies to Poland, Hungary and Austria. The Polish government is anxious to avoid a repeat of this and is building an LNG terminal and investigating the possibility of a pipeline from Norway, Ukraine, Denmark or Germany.
The terminal is being constructed at Swinoujscie near Szczecin in the western part of Poland's Baltic coast (West Pomeranian region).
The advantages of this placement include the lower costs to receive big ships and freight compred with those in Gdansk, and there are large gas consumers (power station and chemical plant) in the immediate vicinity.
Around €950m was secured for Poland's first LNG project in March 2010. Construction is scheduled for completion in June 2014.
Swinoujscie annual demand
"The Swinoujscie LNG terminal is scheduled for completion in June 2014."
In 2009 Poland's annual demand for gas was around 16.4 billion cubic metres. Domestic production accounts for five billion cubic metres (30%) and the remainder is provided by Russian imports.
The new Nord Stream line from Russia to Germany (missing out Poland) may have an effect on the amount of gas available for Poland from Russia.
Poland is nervous about Russian gas. Gaz de France (GDF) previously expressed an interest in helping Poland to build and establish an LNG terminal.
Under an agreement signed in November 2009, GDF agreed to supply 10.27 billion cubic metres of gas every year to Poland from 2022 to 2037. The contract will, however, be valid only after the required documents between the governments of Poland and Russia are signed.
Polish LNG terminal
In January 2008, after a long period of consultation, Canadian LNG engineering specialist SNC-Lavalin was chosen by the Polish natural gas distributor Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) to carry out the front-end engineering and design (FEED) contract for Poland's first LNG import terminal (contract was signed on 10 January 2008).
The site chosen for the new facility is on the Baltic coast at Swinoujscie. The FEED contract is worth zlotyl26m (C$10.6m, €7.2m) and SNC-Lavalin was chosen as the preferred contractor over five other bidders in the tender process including Suez-Tractebel of France.
"The EPC contract was awarded to a Saipem-led consortium."
The engineering, procurement and construction (EPC) contract for the project was awarded to a consortium of Saipem SpA (SPM.MI) of Italy, Saipem SA of France, Italy's Techint Compagnia Tecnica Internazionale, Snamprogetti of Canada, PBG SA of Poland and PBG Export Sp. z o.o. of Poland. The consortium will be led by Saipem SpA.
The value of the contract is PLN2.95bn ($930m). Construction is expected to start in 2011.
The Polish gas distributor PGNiG hopes to complete construction of the new terminal and bring it onstream by June 2014.
The new terminal is expected to initially receive 2.5 billion cubic metres of liquefied gas a year as part of the Polish strategy to limit its dependence on imports from Russia.
The LNG terminal will be fully equipped with unloading jetty for large LNG tankers (with a boil-off and recondensing facility), two storage tanks and regasification train to produce gas at the correct pressure for the grid. Supply contracts for LNG have yet to be negotiated (in discussion with Algeria's Sonatrach).
Finance and expansion
The capacity will be enhanced in subsequent expansion phases of the project depending on demand to five billion cubic metres and then to 7.5 billion cubic metres by 2017 or 2018.
"The total cost of the Swinoujscie project is €950m."
The cost of the project was estimated to be (based on current prices of steel and other materials), around €350m to €450m, but this increased by €500m to reach €950m.
Out of the total cost of €950m, €200m will be provided by European Bank for Reconstruction and Development. The remaining €750m will be arranged by purchase of €75m of Polskie LNG bonds by each of ten other banks led by Bank Pekao and PKO Bank Polski.