Poland has long been seeking to reduce its dependence on Russia for its natural gas supply. With the opening of the new LNG (liquefied natural gas) terminal in the very North-West corner of the country in Swinoujscie, Poland has taken a significant step towards achieving that goal. The Freedom Port, as it is known, is a state-of-the-art liquefied natural gas terminal that will help Poland and its allies to become more independent and secure in their energy supplies.
LNG is primarily composed of methane and is obtained by cooling natural gas to a very low temperature, around -162 degrees Celsius (-260 degrees Fahrenheit), which transforms it into a liquid state. LNG is commonly used as a cleaner-burning fuel mostly for power generation, but also for transportation and industrial applications.
This is not to be confused with LPG (liquefied petroleum gas), which is a mixture of propane and butane and is obtained as a byproduct of natural gas processing and petroleum refining. LPG can also be extracted from crude oil or obtained from the processing of gasoline or diesel. It is commonly used for heating, cooking, transportation, and especially on continental Europe as a fuel for vehicles, often much cheaper at the pump than petrol or diesel.
One of the key features of the Freedom Port is its advanced technology, which ensures that the gas is safely and efficiently regasified. The terminal uses a closed-loop system that recirculates the LNG through a heat exchanger, where it is vaporised by seawater. The regasified gas is then sent to the Polish gas grid via a high-pressure pipeline.
The Swinoujscie LNG terminal on the Baltic coast is a major piece of infrastructure, with an annual regasification capacity of 5 billion cubic metres of natural gas. It consists of two LNG storage tanks, each with a capacity of 160,000 cubic metres, and a jetty that can accommodate LNG carriers with a capacity of up to 266,000 cubic metres. The terminal is connected to the rest of the Polish gas grid via 56-kilometres of pipes.
The engineering challenges involved in building the Swinoujscie terminal were considerable. The site had to be dredged to create a deep-water port that could accommodate the large LNG carrier ships. The LNG tanks were constructed using a technique known as slipforming, in which the walls are continuously poured using a movable formwork. The tanks were then covered with a layer of insulation and a steel outer shell to protect against the elements.
The benefits of the Freedom Port are clear. By diversifying its sources of natural gas, Poland is reducing its reliance on Russia, which has used its energy supplies as a tool of political leverage in the past. The terminal will also help to improve energy security in the wider region, as Poland can act as a hub for gas supplies to neighbouring countries such as Ukraine, Lithuania, and Slovakia.
The Swinoujscie terminal is just one part of Poland’s broader strategy to increase its energy independence. The country has also invested in renewable energy sources such as wind power and solar energy, as well as expanding its domestic coal production. However, natural gas will continue to play a crucial role in Poland’s energy mix for the foreseeable future, and the Freedom Port will be a key element in ensuring that supply remains secure and reliable.
The importance of the Swinoujscie terminal extends beyond Poland’s borders. By strengthening energy security in the region, the terminal is helping to reduce Europe’s dependence on Russian gas, which currently accounts for around 40% of the EU’s gas imports. This will not only improve energy security but also help to reduce the geopolitical influence that Russia wields through its energy supplies.
The terminal has the capacity to receive LNG shipments from around the world, including the United States, Qatar, and Norway. Poland has already signed long-term contracts with suppliers such as Cheniere Energy and Sempra Energy from the US and QatarGas from Qatar. With these partnerships, Poland can ensure a stable supply of natural gas and become a key player in the European LNG market.
LNG Spot Market
Unlike Central Europe’s pipeline gas supply from Russia, Norway, and the Caucasus, LNG is also sold in a spot price market. Negotiations between buyers and sellers (usually Qatar but increasingly also Australia, the United States, Russia, Malaysia, Nigeria, Indonesia, and Trinidad and Tobago) have prices determined by prevailing market conditions and factors such as supply and demand dynamics, shipping costs, and the quality of the LNG.
This offers flexibility to both buyers and sellers. Buyers can procure LNG on short notice to meet their immediate needs, supplement their long-term contracted volumes, or take advantage of favourable market conditions. Sellers, on the other hand, can optimise their production and shipping capabilities by selling excess or uncontracted LNG cargoes.
The spot market enhances market liquidity and efficiency, allowing buyers to access LNG supplies without the need for long-term commitments. It also helps balance global LNG markets by absorbing surplus production or addressing short-term supply shortages. Additionally, spot market transactions serve as a price discovery mechanism, reflecting real-time market dynamics and influencing pricing trends in the broader LNG market. However, spot market sales can be subject to greater price volatility compared to long-term contracts, as they are more influenced by short-term market conditions.
In conclusion, the Freedom Port LNG terminal in Swinoujscie is a remarkable achievement of engineering and technology that will play a vital role in securing Poland’s energy supplies and reducing Europe’s dependence on Russian gas. As Poland and its allies seek to reduce their reliance on Russia, the Swinoujscie terminal will be a key piece of infrastructure in achieving that goal.
