LNG contract between polish PGNiG and Sempra Energy, terminated

LNG contract Poland Sempra

An LNG contract established between Poland’s biggest gas company, and U.S. Sempra Energy has been terminated; due to delays with the Port Arthur terminal, reported Reuters. The Polish state-owned company PGNiG terminated the contract and announced it this Tuesday.

Firstly, the contract was for a 20-year period; the polish company signed it with Sempre Energy back in 2018, as part of a bigger plan to cut reliance on gas imports from Russia. The agreement with Sempra included that PGNiG was to receive around 2 million tons of LNG per year; starting from 2023.

Secondly, Sempra Energy faced some delays on the Port Arthur LNG terminal; in fact, back in May, the company announced it would probably move its planned Investment Final Decision, from 2021 to 2022. The Port Arthur LNG terminal locates in Texas.

Thirdly, PGNiG said in a statement that the call-off for the agreement “was made due to delays in the project’s development.” According to Reuters, PGNiG also signed a memorandum with Sempra; under which it could potentially receive the volumes originally contracted at Port Arthur, from other Sempra facilities.

Moreover, as the polish company intends to reduce its reliance on Russian gas, in the statement it said that; in order to increase LNG purchases from the U.S., it signed agreements with the company Venture Global LNG, by 2 million tons a year, to 5,5 million tons a year.

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LNG contract terminated could possibly harden U.S. and Poland’s relationship

Nevertheless, and despite the termination of the contract, Poland is looking for ways to deepen its energy relationship with the U.S. In fact, according to Reuters, it agreed to buy more U.S. LNG and also hopes the United States will help it build and finance its first nuclear power plant.

However, Poland’s ruling Law and Justice party (PiS) has weakened since Joe Biden won the presidential election. In fact, as Reuters reports, Poland opposed the waiver of U.S. sanctions on the company behind Russia’s Nord Stream 2; and condemned a U.S. deal with Germany over the project.

As we reported previously, the U.S. reached and agreement with Germany over the Nord Stream 2 Russian pipeline. Under that deal between Washington and Berlin, Russia would face penalty costs; if Moscow used the new pipeline to harm Ukraine or other eastern European countries.

Finally, such geopolitical differences may harden the relationship of the U.S. and Poland; the Sempra agreement ending could be a sign of that.

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