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Sempra Infrastructure and Poland’s PKN Orlen SA have entered into a 20-year sale and purchase agreement for the supply of 1 million metric tonnes per year (mtpy) of LNG, the companies said on Jan. 25.
The LNG will be sourced from Sempra’s Phase 1 Port Arthur LNG development project in Jefferson County, Texas, the companies said in separate press releases.
With the Orlen contract, Sempra’s Phase 1 Port Arthur LNG project will supply a total of 10.5 mtpy of LNG to various entities, including RWE Supply and Trading, ConocoPhillips, INEOS and ENGIE. Sempra Infrastructure, a subsidiary of Sempra, is planning a final investment decision (FID) on the facility in first-quarter 2023. First LNG and cargo deliveries are expected in 2027, according to Sempra.
Upon completion, the project will be capable of producing up to 13.5 mtpy of LNG, according to Orlen’s press release.
“We are excited to partner with PKN ORLEN, Central Europe’s largest energy group, as they continue to look for long-term, diverse supplies of secure energy sources,” said Justin Bird, CEO of Sempra Infrastructure. “With the long-term off-take capacity for Phase 1 now sold under binding agreements, we expect to reach FID later this quarter and commence construction on the Port Arthur LNG Phase 1 project to help meet the increasing demand for LNG across Europe and the rest of the world.”
Orlen intends for the long-term contract to strengthen energy security in Poland and Central and Eastern Europe. It will cover approximately 10% of annual current Polish consumer gas demand.
In response to the energy crisis in Europe last year, Orlen Group increased its LNG imports to the Świnoujście terminal by almost 60% year-on-year to 4.4 million metric tons (MMmt) of LNG, with the biggest volumes coming from the U.S.
“Already last year, during a very tense situation on the EU energy market, the United States became one of the main suppliers of natural gas to Poland, said Daniel Obajtek, CEO of PKN ORLEN. “By establishing a partnership with Sempra Infrastructure, we are increasing the diversification of our import portfolio and we are securing additional volumes of natural gas, which will be used both to provide for the needs of the Polish customers and to enhance PKN ORLEN's presence in the international energy market."
The agreement brings Orlen’s total LNG portfolio volume from U.S. suppliers to almost 8 mtpy, with 6.5 mtpy being supplied on a free-on-board basis, according to Orlen’s press release. Orlen Group is developing its shipping capacity based on its long-term charter of LNG carriers and has booked regasification capacity at the President Lech Kaczynski Terminal in Świnoujście, Poland and the FSRU Independence in Klaipeda, Lithuania.
Sempra Infrastructure, a subsidiary of Sempra, is headquartered in San Diego, California and develops, operates and invests in energy infrastructure in North America.
PKN Orlen, based in Plock, Poland, is a fuel and energy supplier in Central Europe and Canada and recently acquired Polish Oil and Gas Company (PGNiG).
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