US ERU Imports Gas into Ukraine from Poland (Adds LNG Comment)

(Adds comment on LNG sourcing, para 3)

US-owned ERU Trading has imported around 70mn m³ regasified LNG into Ukraine, some of which was sold to Ukrainian pipeline operator UkrTransGaz (UTG) and the rest was pumped into underground gas storage facilities, ERU said December 13.

ERU took part in the tender November 28. In early summer, ERU’s Polish supply partner, the state incumbent PGNiG, bought LNG for delivery to Swinoujscie and arranged the transportation of the gas by pipeline to the Polish-Ukrainian interconnector. ERU bought this gas at the border and placed it in storage in Ukraine.

Since April of this year, ERU has had political risk insurance (PRI) from Washington-backed Overseas Private Investment Corporation (Opic), covering $38mn of its $70mn gas import project.  This 20-year contract affords ERU security in the transportation, storage and sale of gas in Ukraine. There has been comment in the press that the LNG is from the US, following the delivery of a cargo in July; that is not possible to determine as the molecules are commingled with Russian and other gas. The Opic agreement is related only to "trading imports LNG from the US and purchases of gas from local producers."

The combination of the availability of spot cargo shipment of LNG and Opic PRI coverage allowed ERU to win one of the ten lots, to supply 135mn m³ to UTG over the next seven months.  ERU was the only private supplier, with all other lots going to Ukrainian state-owned Naftogaz.  ERU’s lot was the lowest priced lot of the ten, bringing lower costs to UTG and to Ukrainian consumers. 

ERU president Dale Perry said: "We are proud in our work with our Polish strategic partner to have made the historic, first shipment of LNG to Ukraine and to be delivering this gas to UTG during the winter months. We see this as the first of many such opportunities as we participate in developing energy supply alternatives for the Ukrainian market."