Poland's pivotal role: Fueling Ukraine with American LNG

The proposal for Poland to become a gas hub for Ukraine was first made in December 2024. Now, the discussion has resurfaced due to the interest of the Ukrainian company DTEK in strengthening cooperation with Poland. DTEK is the largest private energy investor in Ukraine. Its CEO, Maksym Timchenko, recently talked with Polish Parliament representatives, Polish Power Grids, and Deputy Minister of Climate Krzysztof Bolesta.

After the meeting, Timchenko emphasized that his company would engage in negotiations and strengthen cooperation with Poland. Former Ukrainian Minister of Economic Development Pavlo Kukhta mentioned in an interview with wnp.pl that DTEK is interested in increasing LNG supplies from the USA, with Poland potentially serving as a transit country. The construction of the FSRU floating terminal in the Gulf of Gdańsk, set to begin this year, plays a particularly important role.

According to Kukhta, Poland can occupy a crucial position in the geopolitical-economic landscape due to its location and robust transport infrastructure. This would signify a revolution, as gas would stop flowing from east to west and move from the West to Ukraine.

The topic becomes even more relevant as, despite ongoing preliminary peace talks, Russia continues to attack Ukrainian infrastructure. The Ukrainian company Naftohaz reported on Friday that the Russian Armed Forces shelled its gas installations. According to the company's statement, this marks the 18th attack on the company's infrastructure since the invasion began, and the eighth recorded this year.

Ukraine is grappling with the challenge of ensuring sufficient reserves. The reasons are clear: like the rest of Europe, it has turned away from Russian gas and has even halted the transit of Russian resources through its territory.

Now, it is seeking alternatives with the assistance of Poland, the United States, and other Western countries. In April of this year, Ukraine will receive the second shipment of American LNG purchased from Orlen by its Ukrainian counterpart Naftohaz. This results from a memorandum that both companies signed in March. The resource will be delivered from the terminal in Klaipeda. After regasification, it will flow via the GIPL pipeline connecting Lithuania and Poland, then through Polish territory to the interconnector at the Ukrainian border in Drozdowyczach.

These are not the first deliveries of this type. In December 2024, D.TRADING, a subsidiary of DTEK—Ukraine's largest private energy company—announced the purchase of the first batch of liquefied gas from the United States. The cargo, sourced from Louisiana, arrived at a port in Greece and was transported through Greece, Bulgaria, Romania, Hungary, Slovakia, Moldova, and finally, Ukraine.

DTEK signed a contract for 2 million tons, equating to just over 2 billion cubic meters of gas, for 20 years. Naftohaz's agreement with Orlen amounts to 100 million cubic meters annually. However, it is known that the needs are significantly greater.

Ukraine consumes about 20 billion cubic meters of gas annually. While most of it is domestically extracted, imports remain necessary.

Last year, we injected 13 billion cubic meters of gas into storage, though we should have injected 16 billion. The winter was warm, and industry scaled back its operations, but we barely made it through the season. The system is on the edge. If there had been frosts, the situation would have been entirely different,” explains Yuriy Korolchuk, co-founder of the Energy Strategies Fund, in an interview with the Ukrainian portal Espresso.

This institution analyzes and consults on energy policy, energy markets, and regulations.

Estimates show that Ukraine must purchase at least 4 billion cubic meters of gas from the external market. This is the minimum, assuming we are preparing for a regular winter. The problem is that Europe also needs gas, and there is nowhere to buy it, adds Korolchuk.

For these reasons, the Ukrainian government is counting on activating a floating LNG terminal in the Gulf of Gdańsk. The construction of its maritime part began in 2025, and by 2027, the FSRU is expected to arrive in Gdańsk. A Floating Storage Regasification Unit is designed to receive liquefied natural gas from a methane carrier (a ship). It stores the gas and conducts the regasification process, converting it from liquid to gas.

The FSRU unit delivered to Gdańsk in 2027 will have a capacity of approximately 170,000 cubic meters of LNG and a regasification capability of about 6.1 billion cubic meters of natural gas annually.

Dawid Czopek, manager of Polaris FIZ and a fuel market expert, confirmed that Poland can play a significant role in gas transport to Ukraine. "I don't know if it's crucial, but it's definitely important," he stated.

Our capacity to receive LNG ships reaches about 529 billion cubic feet, and the annual gas consumption in Poland under normal conditions (the last few years have been worse due to very high gas prices) can reach 706 billion cubic feet, in addition to the pipeline from Denmark which is about 353 billion cubic feet. Thus, considering only these possibilities, gas imports to Poland could be significantly higher than our needs - the expert calculates.

He explains that Ukraine can easily receive resources from Europe due to its developed infrastructure. The pipeline system was built there decades ago. It remains a matter of reversing the direction of transmission, but surely Ukraine has done quite a bit in this regard so far, explains Dawid Czopek.

- The analyst summarizes that exports to Ukraine can reach at least several billion cubic meters of gas through Poland.

In December, when Ukraine announced the end of Russian gas transit through its territory, Ukraine’s Minister of Energy, Mykola Kolesnyk, stated that Ukraine and Poland are working on creating an Eastern European Gas Hub.

Ending the transit begins competition for new routes and resources, among which LNG is actively increasing its share in the overall EU balance. The integration of gas markets based on existing infrastructure and increasing available cross-border capacity gives an impulse for trade development and the possibility of replacing Russian gas with independent resources, emphasized Kolesnyk.

Not everyone believes that a gigantic hub makes sense—figures like Yuriy Korolchuk temper enthusiasm. The hub is an old idea that emerged in 2006, nearly 20 years ago. At that time, Espresso says, not only physical hubs but also virtual ones, where only transactions are carried out, began appearing in the European market.

To create an Eastern European Gas Hub, political will and real influence over financial institutions are needed, which in turn would influence businesses and force businesses to inject gas here and trade this gas here. Then you can create and exchange. But we don’t have all that. We only have storage, he assessed.

Ukraine is concerned with importing gas for its needs and with foreign traders storing gas in Ukrainian storage facilities. It's not just about the potential profit from the Ukrainian gas system without Russian gas transit.

- It is essential that foreign companies store their gas in our storage facilities to create pressure in the system. The transit does not exist, and it creates problems. The gas we extract needs to be immediately distributed among consumers. The gas in storage must also be pumped from west to east and south. It is a complicated operation, explains Korolchuk.

Before the full-scale invasion began, European companies actively used Ukrainian storage facilities. They bought gas in the summer when the market price was lowest, stored it in Ukrainian storage, and withdrew it during the heating season. Some traders continued storing gas in Ukraine even after the full-scale invasion began, although Naftohaz stopped publishing this data on its website.

The situation changed after Russia started attacking underground gas storage facilities in western Ukraine with rockets and drones last year.

Cooperation between Ukraine and Poland in the gas field can benefit both countries due to the potentially considerable significance of Ukrainian storage facilities. The total capacity of all PGNiG storage facilities in Poland is just over 117 billion cubic feet, five times less than the capacity of storage facilities in the Lviv region alone.

The rest of Europe can also benefit. Ukraine has extremely powerful underground gas storage facilities. Thus, we have the basis for mutually beneficial cooperation. At the same time, we can strengthen Europe’s energy security, assured Ukraine’s Minister of Foreign Affairs Andriy Sybiga last year. Poland can be part of this new strategy.