ORLEN to expand its presence in global liquefied natural gas market with two new LNG carriers

“The latest additions to the ORLEN Group’s fleet of gas carriers mark a significant milestone in advancing Poland’s energy independence and expanding our footprint in the global liquefied natural gas market. Our resolute commitment to diversifying gas imports, primarily through LNG supplies, has been a resounding success. This strategic approach has facilitated our shift away from Russian gas, allowing us to weather the challenges of the European energy crisis. Throughout this period, we have honed capabilities that will underpin our continued efforts to diversify gas procurement sources, meeting the needs of our customers in Poland and the broader region. Natural gas, as a strategic resource, plays an essential role in serving households and supporting the chemical industry, but it also remains a linchpin for an efficient and secure energy transition. Our own fleet of LNG vessels has expanded the ORLEN Group's logistical capacity, strengthening the reliability of supplies while reducing transport costs,” says Daniel Obajtek, CEO and President of the Management Board of ORLEN.

The new gas carriers have been christened with meaningful names: ‘Saint Barbara’ pays homage to the patron saint of miners, oil and gas workers, while ‘Ignacy Łukasiewicz’ honours the pioneering figure in the world oil industry, an illustrious inventor, industrialist, and advocate for Poland’s independence. Crafted by South Korea’s Hyundai Samho Heavy Industries, the vessels will operate under a long-term charter agreement with shipowner Knutsen OAS Shipping.

Once integrated into the fleet, the gas carriers will serve the dual purpose of accommodating both long-term contracts and spot contracts, based on the Free-On-Board (FOB) delivery terms, whereby the ORLEN Group, as the buyer, will be responsible for collecting and transporting the cargoes.

The ORLEN Group’s built-to-order fleet will play a pivotal role in the efficient handling of LNG shipments destined for Poland. The outbreak of the war in Ukraine, coupled with the halt in gas supplies to Europe from the eastern direction, has led to a substantial surge in demand for LNG within the region. In the first half of 2022, imports of liquefied natural gas into the EU reached 54.6 billion cubic metres, a significant increase from 34.3 billion cubic metres in the same period of 2021. This upward trend has continued into 2023, witnessing LNG deliveries in a total amount of 61.3 billion cubic metres in the first half of this year – a 79% increase compared with the same period of 2021. The mounting demand for LNG has resulted in reduced availability of gas carriers in the market, pushing up freight costs. Against this backdrop, entities like the ORLEN Group, equipped with their own dedicated transport facilities, have been able to seize a competitive edge.

Ultimately, the total count of vessels in the ORLEN Group’s fleet will be brought to eight. Each vessel will have a capacity of approximately 70,000 tonnes of LNG, which equates to roughly 100 million cubic metres of natural gas in gaseous state. In terms of size, the gas carriers have been designed to navigate virtually any LNG terminal across the globe. Furthermore, all the vessels have been equipped with solutions improving their energy efficiency and mitigating the environmental impact. These include integrated management of electricity consumption and a reliquefaction system to recover LNG that naturally evaporates during transport.

In terms of ongoing operations, two ships of the ORLEN Group’s fleet have already been deployed this year: ‘Lech Kaczyński’ and ‘Grażyna Gęsicka’, which delivered their inaugural LNG shipments to Poland in March and June, respectively. The upcoming shipment – by ‘Grażyna Gęsicka’ – is expected to arrive in late October or early November this year.

LNG represents a crucial element of the ORLEN Group’s strategy, which aims to diversify the directions and sources of natural gas for Poland. The proportion of seaborne deliveries in the Group’s imports has been progressively on the rise. In 2021, they constituted merely 24% of the total, amounting to 3.94 billion cubic metres. In the span of just one year, the share of LNG surged to 43% of the Group’s imports, with volumes soaring to 6.04 billion cubic metres. This remarkable 50% increase unequivocally establishes liquefied natural gas as the predominant foreign energy source for the ORLEN Group.

The primary gateway for LNG procured by ORLEN remains the President Lech Kaczyński Terminal in Świnoujście. To date, it has seen the arrival of 254 deliveries, totalling some 20 million tonnes of LNG. The majority of these cargoes have come from Qatar (127) and the United States (106), with supplementary contributions from Norway (13), Nigeria (3), Trinidad and Tobago (3), Egypt (1), and Equatorial Guinea (1).

The Group has also extended its capacity through the utilisation of the Klaipėda terminal in Lithuania since May 2022. To date, ten shipments, collectively amounting to nearly 655,000 tonnes of liquefied natural gas, have arrived at the Lithuanian port for the ORLEN Group. Following regasification, the gas makes its way into Poland via the Poland-Lithuania pipeline, while a portion of the fuel is destined for the Baltic markets.

In addition to expanding its dedicated fleet, the ORLEN Group is also enhancing its capacity to receive liquefied gas at domestic terminals. An August agreement with GAZ-SYSTEM marked a significant step, securing regasification capacity at the forthcoming Floating Storage Regasification Unit (FSRU), set to be positioned in the Gulf of Gdańsk. The infrastructure development is expected to boost the annual count of liquefied natural gas deliveries received by the ORLEN Group by up to 58.

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