How the U.S. LNG Can Carve Out a Niche in the EUAug 28th, 2017
Under the competitive climate at the European market, the U.S LNG suppliers will struggle through a sort of difficulties on the way to strong market positions in this sector. Even if the U.S government and businessmen are unitedly able to sideline GAZPROM, it will take vast financial investments as well as time for American LNG to find its niche in Europe. This is the opinion of Michael Moore, a managing partner of consulting company in the field of energy production EWSA, who particularly evaluates the perspectives at the LNG sector in Poland.
First, he describes the situation with the regional infrastructure including regasifying stations and gas terminals, the renovation and construction of which will take a lot of finance within the following 20 years. A big part of the infrastructure projects is in the blueprint stage. Moreover, the successful entry into the EU market is possible only with the provision that the demand remains strong.
Polish foreign minister Witold Waszczykowski informs that Warsaw has not decided on the import of the U.S LNG yet, first, for the reason of its high price as opposed to Russian or Qatar LNG.
Moore notes that the U.S. will prioritize the supplies to the neighbouring countries like Mexico. In addition, the U.S. has difficulties with LNG shipping to Europe as most trading ports are centred upon the national market. Local pipeline infrastructure, mostly designed for dry gas transportation, is overloaded with domestic supplies.
Thus, for today the U.S. is the last of all LNG suppliers for Poland. Even if the U.S. finishes all the planned pipeline and shipping facilities, they will have to compete with the developed European infrastructure and other suppliers that have already taken over this market niche.
Poland annually consumes around 15 billion cubic meters of gas, 10 of which come from Russia. However, Warsaw has long been considering ways to diversify gas supplies to reduce the dependence on Gazprom gas. In February 2016 Polish petroleum company PGNiG filed a lawsuit against Gazprom and Gazprom Export with the requirement to reduce the gas price. To check if the U.S. shale gas is suitable for Polish energy system, PGNiG has concluded a trial contract with Washington. Michael Moore says that despite strong hopes of Warsaw for the U.S. shale gas, in logistical terms Poland should rather choose Qatar or Norway as an LNG supplier.