The new LNG terminal in Świnoujście will be completed by the end of 2014, six months later than previously planned, Treasury Minister Włodzimierz Karpiński said in a statement last week.
Some 65 percent of the terminal has already been completed
Courtesy of The Treasury Ministry
“I am not happy with the delay, however, clinging to an unrealistic schedule is a riskier and costlier solution than accepting that it must be pushed back,” Mr Karpiƒski explained. He also added that postponing the delivery of the gas terminal will “give us time to complete all necessary projects, such as the north-south pipeline, allowing us to transport gas to our southern neighbors and to Balkan states, as well as finalize the contract with Qatargas.”
That last issue is probably the most controversial. The Qatari LNG supplier will deliver 1 million tons of LNG per year starting from 2014. It’s practically impossible that the terminal will be completed on time to process next year’s delivery.
Take or pay
The delay could actually be a blessing in disguise. Citing an anonymous source close to the deal, Reuters reported last week that Qatargas is calling on PGNiG to pay a rate of 16 percent of crude oil prices or higher, plus a fixed component of around $0.50 per million British thermal units (mmBtu). At current prices, that would put the cost of the Qatari gas at $20.50/mmBtu, while gas imported from Russia costs around $13.50/mmBtu. Altogether, for the 10 percent of Polish demand that the Qatari delivery would satisfy, PGNiG could end up paying an extra $325 million annually.
With PGNiG not having technical capabilities to receive the deliveries, it could be forced to pay just partially for the gas it was supposed to receive. Under the contract’s “take or pay” rules, PGNiG will have to pay for at least some of the gas, whether it has the technical capabilities to receive it or not. If it can’t take the gas, PGNiG will have to pay between 50 and 70 percent of the agreed price. However, earlier in September, Mr Karpiński said that Poland is unlikely to pay for supplies if the LNG terminal is delayed.
PGNiG itself didn’t want to reveal the details of the contract, citing a confidentiality clause. However, the company’s spokesperson Rafał Pazura assured WBJ that “PGNiG’s interests are secured.”
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