(Adds PGNiG quote)
DUBAI/WARSAW, March 14 State-owned Qatargas has
agreed to double volumes of liquefied natural gas (LNG) it
supplies to Poland's gas firm PGNiG to 2 million tonnes
per year at a price that may have positive impact on PGNiG's
bottom line, the companies said.
The agreement comes as Poland is struggling to reduce its
reliance on supplies of Russian gas, while a deepening global
gas glut offers opportunities to bring in cheap LNG from Qatar
For Qatar, which faces competition from Australian and U.S.
producers, supply deals into Europe offer a valuable option as
Asia's gas-consuming economies rein in new deals in light of a
growing supply overhang.
The deal is a side agreement to a long term-contract PGNiG
and Qatargas signed in 2009.
The companies then agreed that Qatargas will deliver to
Poland around 1 million tonnes or around 1.5 billion cubic
metres (BCM) of gas annually for 20 years starting from 2014. At
the time PGNiG estimated the deal's annual average value at
around $550 million, based on prevailing oil prices.
The price in the side agreement was not revealed but PGNiG
said pricing terms were "satisfactory" and expected to have a
"positive impact" on its financial results.
An industry source said Qatargas's expanded deal with Poland
likely came with a price discount – which PGNIG had been in
talks to secure for several years after paying at the peak of
the market last time around.
"We have conducted the talks for a few months. It was the
best offer. (...) This is now the biggest Qatargas contract of
this type in Europe," PGNiG deputy head Maciej Wozniak told a
conference on Tuesday, repeating he could not reveal the price.
The new deal will come into effect at the start of 2018 and
run until June 2034.
The LNG will be supplied from Qatar Liquefied Gas Co, a
joint venture between Qatar Petroleum, ConocoPhillips
and Mitsui & Co, and will be delivered by Q-Flex LNG
vessels to the LNG terminal in Swinoujscie at the Baltic Sea.
Poland's first LNG terminal on the Baltic Sea coast started
commercial operations in summer last year and has been Poland's
flagship project to reduce the country's reliance on supplies
from Russia's Gazprom.
PGNiG also plans to build a gas link to Norway to receive up
to 10 bcm of gas annually from the North Sea after 2022 when its
long-term deal on gas supplies with Gazprom expires.
Poland, which consumes around 16 bcm of gas annually, also
wants to buy more gas on the spot market.
(Reporting by Andrew Torchia in Dubai, Agnieszka Barteczko in
Warsaw and Oleg Vukmanovic in Milan, editing by David Evans)