ASSET REPORT

MAY, 2023

Polskie - LNG regas terminal

Polskie - LNG regas terminal

Key facts
Infrastructure Summary
Status Operational Access Open Access
Location Poland Type Conventional Onshore
Port of Swinoujscie, Szczecin
Berths Storage
No. of Berths 1 No. of Tanks 3
Max. LNG Ship Size (m³) 216,000 Capacity (m³) 500,000
Max Berth Details
Length (m) 315
Beam (m) 50
Draft (m) 12.5
Regas (mmcfd) (mmtpa)
Nominal Capacity 603 4.6
Peak Capacity 630 4.8
Effective Capacity 603 4.6

Financial Summary1 (2023 Terms)

Phase Start-up CAPEX Regas Tariff
(US$M) (US$/mmBtu)
Initial Phase Dec 2015 1,085 -
Exp. Phase I Jan 2022 -
Total 1,085 0.49
1. Based on estimated values only

Corporate Summary
Owners GAZ-SYSTEM* 100%
Capacity Holders
Phase Company Start Expiry Capacity Capacity
Year Year (mmcfd) (mmtpa)
Initial Phase PGNiG 2015 2045 314 2.4
Exp. Phase I PGNiG 2022 2099 119 0.9
Source: Wood Mackenzie

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Polskie - LNG regas terminal

Location maps
Map
4
15°0'E 20°0'E
Taurage Kedainiai

Ba
Jurbarkas Vilnius -

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Sovetsk
55°0'N

55°0'N
Ka liningrad
2

Ga
m
rea Kaliningrad LNG Siakiai
St

s
Kaunas
rd (mothballed)
o
N am
rd
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No Kosakowo CUGS
- salt cavern  =_
4
Kaliningrad
RUSSIANLITHUANIA
Vilkaviskis
Marijampole
St Ba Gdynia
Gdansk FE DE RAT ION Alytus
ltic

Gdansk
Daszewo - Low LNG (proposed) Wegorzewo
Pip

Methane gas Elblag Suwalki

e

Olecko
 Dobre Miasto
=_ Olsztyn
Ketrzyn
Elk
Augustów

Polskie LNG Grodno

OP AL

Szczecin

Bydgoszcz
Torun ork Bialystok
Schwedt as netw
Mogilno Yamal - Europe neg
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

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BERLIN H
Poznan

WARSAW
Minsk Mazowiecki Brest

Zielona Gora Bonikowo
- Low Lódz
Methane gas

 Radom
Wierzchowice
UGS POLAND
Dresden Lublin
Wroclaw
Kielce
Czestochowa
Opole

Tra Swarzów
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Ste Katowice
ti  Husow UGS

50°0'N

50°0'N
Krakow
PRAGUE
Ostrava
Brzeznica  Lviv
UGS
CZECH v Przemysl
Blatna viro
REPUBLIC Ha 
Strachocina UGS

Trans-Czech Brno
Zlin

S L O VA K I A UKRAINE
km Source: Wood Mackenzie, Esri
0 100 200

Terminal overview
Construction of Poland's first LNG terminal, Polskie LNG, started in October 2010. The 484 mmcfd (3.7 mmtpa) facility has two
160,000m³ storage tanks, and is capable of accommodating ships up to 217,000m³ in size. The contract to build the terminal
was awarded in August 2010 to a consortium made up of Saipem, Techint Compagnia Technica Internazionale, Snamprogetti,
and Poland's PBG.

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Polskie - LNG regas terminal

The site is less than five kilometres from the German border and in August 2010, Germany expressed concerns about the
project's environmental impact and competition with the Nord Stream pipeline. It had demanded a cross-border environmental
impact study, as is its right under the United Nations Economic Commission for Europe's Espoo Convention, which could have
set back construction by two to three years. However, the dispute with Germany was quickly resolved in October 2010 without
the need for a new environmental assessment.

The port of Swinoujscie was chosen as the site for the terminal due to its proximity to existing infrastructure, strong local
demand and a shorter transportation route from supply countries. PGNiG created Polskie LNG LLC in March 2007 to develop
and operate the terminal and in January 2008, Canadian engineering firm SNC-Lavalin was awarded a contract to carry out
FEED for the terminal. In December 2008, ownership of Polskie LNG was transferred to Gaz System, Poland's state-owned
transmission network operator, as part of gas infrastructure unbundling. In March 2021 the two companies were merged to
increase the efficiency of the management of investment processes.

The cost of the project was approximately US$950 million (in 2016 terms). PLN 602 million (US $162 million) was provided by
the EU's Operational Programme Infrastructure and Environment programme and PLN 220 million (US $59.5 million) from the
European Energy Programme form Recovery in the form of grants. The European Investment Bank provided a loan of PLN 600
million (US $162 million) and the European Bank for Reconstruction and Development provided a PLN 300 million (US $81
million) loan. A further PLN 18 million (US $4.9 million) of loans were sourced from commercial banks and Gaz-System funded
just over PLN 1 billion (US $260 million) of the project.

Developers were initially targeting a start-up date of mid-2014, but construction faced delays. A key factor in the delay was the
downturn in the construction industry in Poland in 2012 and the financial state of one of the EPC consortium - PBG - and the
bankruptcy of its key subcontractors - Hydrobudowa Polska SA. Disagreements with Saipem, the contractor, over financing the
final phase of construction led to further delays in 2015. These were resolved in October 2015 and the terminal received its
commissioning cargo from Qatar in December 2015. The first commercial deliveries started in June 2016.

An 85 kilometer long Swinoujscie-Szczecin pipeline connects the LNG Terminal with the Polish transmission system.
Furthermore, Gaz System's Investment Programme for the period 2015-2025 calls for an additional 2,000 km of new gas
pipelines in western, southern and eastern Poland, and includes new interconnections with Czech Republic, Slovakia and
Lithuania. Indeed, in May 2020, the Italian company Saipem was awarded a contract worth US$291 million by GAZ-SYSTEM for
the installation of a natural gas pipeline between Denmark and Poland. Moreover, in May 2022, the Lithuanian-Polish gas
pipeline became operational. It will run from Jauniunaj Gas Compressor Station in Sirvintos district to the Holowczyce GCS on
the Polish side.

Domestically, interconnectors are being built between Swinoujscie and Szczecin, Szczecin and Gdansk, Rembelszczyzna and
Gustorzyn, Gustorzyn and Odolanów, Polkowice and Zary and Szczecin - Lwówek to name but a few. In 2019, a major project
to lay 55km of natural gas pipeline between Tworog and Tworzen, in the Slaskie region has received backing from the European
Regional Development Fund.

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Polskie - LNG regas terminal

Utilisation
Approximate Monthly Import Data by Country

An open season for capacity at Polskie LNG was launched in June 2009, but PGNiG was the only company to sign up, taking
370 mmcfd in March 2010. This left more than a third, or 202 mmcfd, of the capacity at the terminal unsubscribed. A second
open season was launched towards the end of 2011 for 35% of the terminal capacity. The results were announced in January
2012, when Polskie LNG rejected the only one submitted application owing to formal errors in the application form.

PGNiG signed a GSPA (gas sales and purchase agreement) with Qatargas in June 2009 to supply 1 mmtpa (132 mmcfd) to
Polskie LNG from 2014 for 20 years. The LNG price in the GSPA is linked to crude oil prices. However, due to delays in the
commissioning of the terminal - which was supposed to commence operations in mid-2014 - PGNiG was forced to renegotiate
its 20 year contract for 1 mmtpa with Qatargas. PGNiG has been liable to cover any difference in price while Qatargas attempts
to sell these contracted volumes into other markets.

Between 2017 and 2019 PGNiG signed a number of contracts with Venture Global, Cheniere, Centrica, Sempra and Qatargas,
several of which are long-term contracts, representing over 8 mmtpa. For more information please refer to the contracts section
of the LNG Tool.

Operational basis
Due to limited and declining indigenous gas production, Poland has to import more than 80% of its gas requirement. Before the
Russian/Ukraine war, the country was importing almost 40% of its natural gas from the Russian Federation. However, the
conflict has halted Russian imports into Poland, further increasing the already existing concerns about security of gas supply. It
has accelerated plans to diversify gas suppliers into Poland, and more generally into Europe.

The Polskie LNG terminal is one of several gas infrastructures projects in Poland that aims to increase this supply diversity. The
country is now meeting the majority of demand from LNG imports and piped gas from Norway and other EU market.

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Polskie - LNG regas terminal

Offtake
Northwest Poland is an area with strong local demand and potential for future growth, particularly from industry. Swinoujscie is
connected to the high-pressure natural gas transmission network, which will allow the regasified LNG to be distributed
throughout the region. Interconnectors into Slovakia and Ukraine allow for the penetration of regasified LNG (RLNG) into central
Europe. The terminal capacity utilisation has already strongly increased the past years, from 50% in 2018 to 83% in 2021. We
expect demand for RLNG and investment in related infrastructure between Poland and surrounding markets to increase in the
medium term, particularly as they pivot from Russian gas.

PGNiG already signed long-term contracts with American LNG suppliers for a volume over 9 bcm of natural gas after
regasification. The company signed, among others, a 20-years contract with Sempra infrastructure for 3 million tons of LNG per
annum. These contracts will increase significantly supplies from the US from 2023. The cargoes will be delivered in Swinoujscie
terminal as well as Klaipeda terminal in Lithuania to provide gas for the customers in Poland and in the Baltic States.

Tariffs
All tariffs are published by GAZ-SYSTEM after approval from the President of the Energy Regulatory Office. These tariffs have
been updated seven times, each year since 2016 and most recently in January 2022.

Regasification service fee includes fixed costs, for the contracted capacity and variable costs, for the volume of gaseous fuel
generated in the regasification process.

From 1 January 2022, the fixed fee is PLN 5.2942/MWh and the variable fee is PLN 1.8554/MWh. Assuming an exchange rate
of PLN 1 = US$ 0.235 and 1 MWh = 3.4121 mmbtu, the fixed fee is US$ 0.36/mmbtu and the variable fee is US$ 0.13/mmbtu.

Moreover, the operator takes 1.5% of gas in kind out of the LNG cargo to power the regasification process. The fees are then
calculated on the collected volume, 98.5% of the initial unloaded volume.

Future expansions
The expansion project of the Polskie terminal has two stages, to increase the terminal regasification capacity to 8.3 bcm / year
in 2024. In 2022, the Swinoujscie terminal had already acquired a regasification capacity of 6.2 bcm annually, compared to 5
bcm previously.

The first phase consists of adding two Submerged Combustion Vaporisers units to the existing regasification infrastructure. In
July 2018, Polskie LNG received a permit, issued by the province of West Pomerania, for this phase of the expansion. Then, in
February 2020, the company signed a contract with a consortium of PORR and TGE.The second phase consists in building a
third LNG tank with 180,000 m3 capacity as well as further equipment and connection to existing infrastructure.

The contract worth US$493 million with the consortium of PORR S.A. and TGE Gas Engineering GmbH, commissioning the
work, was signed on 24 June 2020. The scheduled completion date is the end of 2023.

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