PKN ORLEN and Sempra Infrastructure enter long-term LNG sales and purchase agreement
The 20-year contract between PKN ORLEN and Sempra Infrastructure provides for the supply of 1 million metric tonnes of liquefied natural gas per year from the Phase 1 Port Arthur LNG development project. The contract strengthens the energy security of Poland and the Central and Eastern European region. The agreed volume of supplies covers about 10 per cent of the current annual gas demand of Polish consumers.
“We are delighted to enter into this long-term agreement with Sempra Infrastructure. This is an important step towards strengthening PKN ORLEN's position as a cornerstone of crude and fuel supply security in Central and Eastern Europe. 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. 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," said Daniel Obajtek, CEO of PKN ORLEN.
The agreement between PKN ORLEN and Port Arthur LNG, LLC, an affiliate of Sempra Infrastructure, provides for the supply of 1 million metric tonnes of LNG per annum for 20 years, delivered on a free-on-board (FOB) basis. The LNG cargoes will come from the Phase 1 liquefaction terminal under development in Jefferson County, Texas. The contract's pricing formula is based on the Henry Hub index along with liquefaction costs.
“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.”
The Port Arthur LNG Phase 1 project is projected to be capable of producing, under optimal conditions, up to approximately 13.5 million metric tonnes of LNG per year. Port Arthur LNG has entered into long-term sales and purchase agreements covering more than 10 million metric tonnes of the terminal's annual production. The company expects to reach a final investment decision for the Phase 1 project later this quarter. The first LNG is expected in 2027.
After signing the agreement with Sempra Infrastructure, the total volume of PKN ORLEN's contracts with U.S. LNG suppliers has increased to nearly 8 million metric tonnes of liquefied natural gas per year. The vast majority of the LNG portfolio – 6.5 million metric tonnes of LNG per annum – will be supplied on the FOB basis, hence the development of ORLEN Group’s shipping capacity based on a long-term charter of LNG carriers. The first two ships, built specifically for ORLEN Group, will enter into service this year. By the end of 2025, the Group will have eight such vessels.
The FOB delivery allows the buyer to decide the port of destination of the cargo. ORLEN Group has booked regasification capacity at two terminals: the President Lech Kaczynski Terminal in Świnoujście, Poland and the FSRU Independence in Klaipeda, Lithuania. The second terminal in Poland, to be located in the Gulf of Gdansk, is planned to be launched in 2028.
Last year, in response to the European energy crisis, ORLEN Group increased its LNG imports to the Świnoujście terminal by almost 60 percent year-on-year, to 4.4 million metric tonnes of liquefied natural gas (approx. 5.8 billion cubic meters after regasification). The biggest volume of deliveries came from the United States, exceeding 2.4 million metric tonnes, equivalent to 3.3 billion cubic meters of gas after regasification.
About PKN ORLEN
PKN ORLEN is an integrated, multi-utility company, operating in Central Europe and Canada. It provides energy and fuel to over 100 million of Europeans, while its advanced products are marketed to over 90 countries across 6 continents.
PKN ORLEN pursues strengthening its position of a regional leader in energy transition by implementing clean and sustainable technologies, as well as power generation based on low- and zero-emission sources. The company’s actions are driven by a strategic goal of reaching emission neutrality by 2050.
About Sempra Infrastructure
Sempra Infrastructure delivers energy for a better world. Through the combined strength of its assets in North America, the company is dedicated to enabling the delivery of cleaner energy for its customers.
With a continued focus on sustainability, innovation, world-class safety, championing people, resilient operations and social responsibility, its more than 2,000 employees develop, build and operate clean power, energy networks and LNG and net-zero solutions that are expected to play a crucial role in the energy systems of the future.