Poland Will Pay Anything To Rid Itself Of Gazprom
Poland is considering paying Qatar an estimated 40 to 50 percent more for natural gas than it currently pays Russia’s Gazprom. For Warsaw, it’s a small price to pay to lessen its dependence on Moscow, which has a long history of leveraging its prodigious natural resources—natural gas, especially—to wield influence abroad.
Qatar is the world’s biggest exporter of liquified natural gas (LNG), but per the terms of an agreement signed with Poland in 2009, it will charge a hefty premium for its goods. Poland is constructing an LNG import terminal in anticipation of the Qatari shipments, which will begin in 2015 and run through 2035. The Qatari gas might be more expensive, but the quantities delivered will be just 13.5 percent of what Poland currently imports from Russia. One industry source toldReuters that the deal “may be considered symbolic given the relatively low volumes on offer,” and that the import terminal under construction might “eventually be an outlet for US LNG once exports start.”
Poland isn’t the only country paying inflated prices for liquified natural gas. Countries across Europe also looking to wean themselves off Gazprom, and countries in Asia are agitating for lower prices—especially Japan, which is importing record amounts of LNG after shutting down nuclear plants in the wake of the Fukushima accident. LNG buyers met in Tokyo this week to discuss the issue and announced plans to fund studies of LNG pricing (and ways to bring prices down). Japan also inked a deal with India on Monday to look at buying LNG together. Japan and India, the world’s largest and fourth largest LNG importers respectively, are hoping to get a bulk price discount from exporters, who are insisting that high prices are necessary to fund further gas production.
All of these countries are jealously eying America’s natural gas glut. Thanks to shale, US natural gas prices are a small fraction of those being paid by LNG importers. Converting natural gas to the more easily shipped LNG would roughly double the price of American gas, but that would still be low enough to significantly undercut the prices that exporters like Qatar are charging. The US would be throwing its allies in Europe and Asia a very large bone if it hurried up the LNG export terminal permitting process.