PETROANALYSIS || ARTICLE

Poland: Baltic Pipe means less dependence on Russian gas

Published on

October 17, 2018

in

Article by

Stuart Wilkinson

The Baltic Pipe Project is a strategic gas infrastructure project with the goal of creating a new gas supply corridor in the European market.

The Baltic Pipe Project will allow the transport of gas from Norwegian gas fields to the Danish and Polish markets, as well as to end-users in neighbouring countries. At the same time, it will enable the supply of gas from Poland to the Danish and Swedish markets.
It is being developed in collaboration between the Danish gas and electricity transmission system operator Energinet and the Polish gas transmission system operator GAZ-SYSTEM. (1)

Baltic Pipe is expected to make a significant contribution to the creation of an internal European energy market and is aligned with the objectives of the European Union’s energy policy, as for example increased competition, integration of gas markets, improved security of supplies and effective implementation of sustainable development guidelines. Notably, the diversification of supplies through the direct access to deposits of Norwegian natural gas will significantly improve energy security.

Its main objectives can be summarised as:

  • Integration of the Danish-Swedish and Polish gas markets through supply competition and bi-directional trade to ensure increased price convergence.
  • Strengthening the security of supplies in the region by providing access to Norwegian natural gas deposits to Danish-Swedish and Polish markets, as well as other markets in Central and Eastern Europe.
  • Further improvement in the utilization of the existing infrastructure in Denmark to reduce tariffs and benefit users.
  • Increasing competitiveness in regional gas markets and facilitate price convergence, allowing new players to enter the market, and potentially increasing demand for gas in regions covered by the project;
  • Increasing technical reliability of gas supplies to customers by diversifying import routes.
  • Linking of Baltic Pipe to the LNG terminal in Świnoujście, potentially giving Scandinavian countries access to the global liquefied natural gas (LNG) market.

Baltic Pipe will include the expansion of the Polish gas infrastructure and will consist of approximately 800-950 kilometres of new pipelines. It is projected to start its gas transmission services by the end of 2022 and would expand Europe’s gas transmission capacity by up to 10 billion cubic metres of gas per year.

The EU has included Baltic Pipe on its list of key infrastructure projects that are of common interest to Europe – also known as “PCI projects”. This is due to the essential role Baltic Pipe could play in contributing to the development of Europe’s internal market for gas, and the fortification of EU’s security of supply. (3)

In terms of the route to be taken, Gaz-System has accepted the variant of the Baltic Pipe gas pipeline routing that was proposed by the contractor of technical and environmental documentation – Rambol. This route was analysed primarily in terms of environmental, technical and socio-economic aspects. (4)

Towards the end of August this year Baltic Pipe obtained a boost in the form of financing from the European Union, to a maximum of EUR18.3m, as well as having its route recommended.

Its stages have been financed progressively from 2015, when the analysis started, to 2017, when, for the third time, it became a Project of Common Interest.

The route itself was confirmed earlier, in late June, and will run between Niechorze in Poland and Faxe South in Denmark, a total of 275 km, and will have a capacity of 10 billion cubic meters. This will ensure a secure gas supply from the Norwegian North Sea gas fields to Poland, lessening the dependence on Russian gas supply.

Speaking to Polish news portal wnp.pl, Piotr Naimski, the government plenipotentiary for strategic energy development stated that the project is, in a political sense, priceless, adding that the Nord Stream-2 project, also in the Baltic, will enable Russia to put more pressure on Ukraine. “Poland is playing chess with a very experienced and determined opponent, but then we are coming up to master status too.” (5)

References:

1) Crossing borders for secure, affordable and sustainable energy. Baltic Pipe Project
2) Baltic Pipe Project. En.gaz-system.pl
3) Baltic Pipe: Gas pipeline, connecting Denmark and Poland with Norway’s gas fields. En.energinet.dk
4) The route of the Baltic Pipe gas pipeline has been selected. www.polandatsea.com
5) Baltic Pipe gets further financing and recommendation of final route. Financialobserver.eu

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