Poland to use more LNG as coronavirus speeds coal's decline - PGNiG

[Tom Kirkman + 8,860]

Unexpected news.  Bad news for coal and for Russia's gas quasi-monopoly.  Good news for LNG exporters.  Competition is good, it provides *choice* to buyers.

 

Poland to use more LNG as coronavirus speeds coal's decline - PGNiG

(Reuters) - Poland’s dominant gas company PGNiG anticipates a rise in gas use that will be met by imported liquefied natural gas (LNG), the chief executive said, as the country shifts from coal and curbs its reliance on Russian pipeline supplies.

Poland is reducing its dependence on coal as its own supplies are increasingly uneconomic. It is also cutting its decades-old reliance on Russian pipeline gas in favour of imported LNG, including from the United States and Qatar.

The state-run PGNiG is a shareholder in PGG, Poland’s biggest coal producer, which is struggling to survive the impact of low coal prices, falling demand, rising stockpiles and a high rate of coronavirus infections among miners.

Even though the impact of the novel coronavirus has cut energy consumption, demand for gas should be robust as the difficulties of the coal industry accelerate a shift to lower carbon gas, PGNiG Chief Executive Jerzy Kwiecinski told Reuters in an interview.

“The epidemic may accelerate (energy) transformation, as the companies that will undergo this process have found themselves in an even more difficult situation and actions in these companies will have to be faster than we had initially planned,” he said.

“I think that the LNG market will not decrease this year despite the pandemic. The impact of pandemic will be rather short-lived - mostly in the second and third quarter,” the CEO said.

Figures from Poland’s power grid operator show power production from gas-fuelled power stations rose by almost 27% year on year in the first quarter and fell by 23% from coal-burning stations. ...

 

[Blackbag99 + 20]

There are a lot of sources of LNG. Including Russia!

At the moment the EU is awash with natural gas. 

[Tomasz + 1,608]

 

It's nice only Poland together with Bulgaria and Romania is stiill the 3rd poorest country in the European Union based on low labor costs and a low margins in industry. 

We voluntarily replace cheaper energy sources, i.e. coal and Russian gas, with a generally more expensive source, which is LNG.

Germany, which is much richer than Poland, is not doing it together with the Czech Republic  Hungary or Slovakia, even Lithuania, which is almost as anti-Russian as Poland.

All of them wil still use russian gas although they are more wealthy states than Poland.

People in Poland often nowadays heat houses with the worst coal or even  garbage, so in some places we have really terrible smog in Poland, which is why people are dying  here and the government is funding relatively expensive energy sources for people and industry.

Ideology with current goverment wins over economics and this rarely ends well in the long run.

It just so happens that gas in Europe is much cheaper, but my bills for heating the house are not falling and the net profit of the PGNiG concern is falling from year to year after placing on LNG.

How else should I interpret this rare phenomenon?

Its PGNiG on polish market-current goverment rules from beginning of 2016

https://stooq.pl/q/?s=pgn&c=10y&t=l&a=lg&b=0

Edited May 21, 2020 by Tomasz

[Tomasz + 1,608]

 

Let us note the success of Polish LNG diversification

As of today, low spot gas prices in a Dutch hub are about  at $ 2 per mbbtu or $ 70 for 1,000 m3

Last week, polish state company PGNiG boasted the delivery of another 98th LNG vessels from Qatar

A lot of sources on industry portals in Poland says that the price formula in the contract with Qatar is 16% of the price of brent oil plus 0.5 $ per mbbt

So if we settle this delivery as of today, it gives us a price of 0.16 times 42.30 plus 0.5 or $ 7.27 per mbbtu or $ 260 for 1,000 m3.

Spot Price 70 vs LNG price 260 - what more to add here

[dukeNukem + 80]

On 6/22/2020 at 5:35 PM, Tomasz said:

 

Let us note the success of Polish LNG diversification

As of today, low spot gas prices in a Dutch hub are about  at $ 2 per mbbtu or $ 70 for 1,000 m3

Last week, polish state company PGNiG boasted the delivery of another 98th LNG vessels from Qatar

A lot of sources on industry portals in Poland says that the price formula in the contract with Qatar is 16% of the price of brent oil plus 0.5 $ per mbbt

So if we settle this delivery as of today, it gives us a price of 0.16 times 42.30 plus 0.5 or $ 7.27 per mbbtu or $ 260 for 1,000 m3.

Spot Price 70 vs LNG price 260 - what more to add here

Thanks Tomasz, interesting stuff...And the thing is generally Qatar LNG is one of the cheapest on the market....