GAZ-System: GIPL Business Case Analysis Completed (Poland)

Poland’s GAZ-SYSTEM said that the Business Case Analysis of Gas Interconnection Poland – Lithuania (GIPL), which would integrate Baltic States into EU gas market as well as provide access to the global LNG market via the LNG terminal in Swinoujuscie, has been finalized.

The Business Case Analysis revealed strong benefits of GIPL for the regional gas markets in terms of security of supply and market opportunities, as well as challenges to be tackled.

According to preliminary estimations, the length of the GIPL would make up 562 km with the capacity allowing transporting to Baltic States up to 2.3 billion m3 of natural gas per year. The estimated construction costs would amount to EUR 471 million, the major share of investment (73%) would be based in Poland. With additional moderate investment, the capacity of interconnection could be increased up to 4.5 billion m3 per year.

“The project we are analyzing, the Gas Interconnection between Poland and Lithuania, is about bilateral infrastructure, but of regional importance. As it involves a broad circle of stakeholders and major investments in terms of regional gas markets, it should be very thoroughly and responsibly analyzed what could be the optimal and balanced solution for the full integration of Baltic countries into EU gas market. Together with our Polish partner GAZ-SYSTEM S.A. we will continue the implementation of this project, and I hope other stakeholders in the Baltic countries will take in this part as well”, – Viktoras Valentukevičius, General Manager of AB Lietuvos Dujos said.

”We have made an important step to prepare this substantial investment – the Poland –Lithuania gas pipeline- to integrate the gas network in this part of Europe. I believe that European Union will support this joint Polish-Lithuanian project. For the Baltic countries the Poland –Lithuania pipeline is a strategic element of the gas infrastructure and provides access to the global gas market, among others, by the LNG terminal in Świnoujście” – Sławomir Śliwiński, Member of the Management Board of GAZ-SYSTEM S.A., commented.

The Business Case Analysis of the GIPL was performed by Ernst & Young Business Advisory LLC & PLP on the basis on trilateral Agreement with AB Lietuvos Dujos and GAZ-SYSTEM S.A., gas transmission operators in Lithuania and Poland, respectively.

Recently the management bodies of AB Lietuvos Dujos and GAZ-SYSTEM S.A. have taken a decision on proceeding with the next stage of the project – preparation of the Feasibility Study of the Gas Interconnection. In the coming weeks the tender for the preparation of Feasibility Study shall be announced. The Feasibility Study should be accomplished in the fourth quarter of 2012. Then the comprehensive market screening should be performed followed by the preparatory works for the granting necessary EU support for the construction of Gas Interconnection Poland – Lithuania.

The analytical works (Business Case Analysis and Feasibility Study) of Gas Interconnection Poland – Lithuania are co-financed by European Commission providing financial aid within the scope of the Trans-European Networks–Energy (TEN-E) Programme.

The Lithuania – Poland connection may constitute one of the elements of the strategy for the integration of the energy markets of countries located in the Baltic Sea region by creating international energy connections called the Baltic Energy Market Interconnection Plan (BEMIP). BEMIP constitutes one of the priorities for the development of the energy infrastructure marked out by the European Union within the Second Strategic Energy Review (SER2). Its purpose is to integrate the gas and energy markets in the Baltic Sea region as well as put an end to the isolation of Baltic countries from the European Energy market.

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LNG World News Staff, February 10, 2012