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Poland to use more LNG as coronavirus speeds coal's decline

The state-run PGNiG is a shareholder in PGG, Poland's biggest coal producer, which is struggling to survive the imp
19 May 2020
  • The state-run PGNiG is a shareholder in PGG, Poland's biggest coal producer, which is struggling to survive the impact of low coal prices.
  • The epidemic may accelerate (energy) transformation, as the companies that will undergo this process have found themselves in an even more difficult situation.
  • Figures from Poland's power grid operator show power production from gas-fuelled power stations rose by almost 27% year on year in the first quarter and fell by 23% from coal-burning stations.

WARSAW: Poland's dominant gas company PGNiG anticipates a rise in gas use that will be met by imported liquefied natural gas (LNG), the chief executive said, as the country shifts from coal and curbs its reliance on Russian pipeline supplies.

Poland is reducing its dependence on coal as its own supplies are increasingly uneconomic. It is also cutting its decades-old reliance on Russian pipeline gas in favour of imported LNG, including from the United States and Qatar.

The state-run PGNiG is a shareholder in PGG, Poland's biggest coal producer, which is struggling to survive the impact of low coal prices, falling demand, rising stockpiles and a high rate of coronavirus infections among miners.

Even though the impact of the novel coronavirus has cut energy consumption, demand for gas should be robust as the difficulties of the coal industry accelerate a shift to lower carbon gas, PGNiG Chief Executive Jerzy Kwiecinski told Reuters in an interview.

"The epidemic may accelerate (energy) transformation, as the companies that will undergo this process have found themselves in an even more difficult situation and actions in these companies will have to be faster than we had initially planned," he said.

"I think that the LNG market will not decrease this year despite the pandemic. The impact of pandemic will be rather short-lived - mostly in the second and third quarter," the CEO said.

Figures from Poland's power grid operator show power production from gas-fuelled power stations rose by almost 27% year on year in the first quarter and fell by 23% from coal-burning stations.

PGNiG has received LNG supplies under contracts with Qatar and the United States as planned, regardless of the novel coronavirus pandemic. Kwiecinski said, however, the company was in touch with its US partners over the timetable of the construction of LNG terminals. He did not give details.

Cheniere Energy Inc, the largest US LNG company, and a PGNiG supplier, has predicted investment in new projects worldwide will slump this year and next as the pandemic limits demand.