The European Commission is expected to provide 60-70 percent of project funding. A study of project business environment has shown that it would be advantageous for the region.
“An approximately 300 kilometers-long gas supply line would be built on Poland’s territory...,” Slawomir Sliwinski, a member of Gaz-System’s board, told the reporters at a news conference in Vilnius on Friday. Gaz-System was ready to launch the construction works, he said.
“We will start with the feasibility and marketing study. The final decision will be taken after the completion of the study and securing of support from the European Commission,” Sliwinski said.
The interconnection would be very advantageous for the region’s gas markets, Rafal Wittmann, director of the Development and Investment Division of Gaz-System, said during a presentation of analysis of business environment for the interconnection of Polish and Lithuanian gas grids. The link would enhance the reliability of supply and widen market possibilities, he said.
Speaking about the effects of the link on transmission rates, he noted that, depending on various factors like the funding to be extended by the European Commission or market demand, the rates in Lithuania might increase by approximately 22 percent.
"The transmission rates in Lithuania may increase – the scale of that increase will depend on the level of funding from the European Commission. If the market grows, the effect on the rates may be less pronounced... The effects on transmission rates will be approximately 22 percent,” Wittmann said.
The construction of the link was planned to be launched in 2016, he added.
The interconnection between Poland’s and Lithuania’s gas grids will be 562 kilometers long. Up to 2.3 billion cubic meters of natural gas might be transported to the Baltic countries via the link annually.
As reported earlier, Gaz-System plans to build a gas pipeline to Lithuania by 2018.
The interconnection should contribute to the integration of European gas systems and the development of liberalized gas market in North East Europe.
Competition from liquified gas terminals
A project on building an interconnection between the gas grids of Lithuania and Poland would become risky if liquefied natural gas (LNG) terminals were built in Lithuania or Latvia, a representative of Poland’s gas transmission system operator Gaz-System has said.
“We do not want to say that such a gas link would become unnecessary, but the investment would entail more risks and would probably require more investments from the European Commission. Of course, in this case this investment would be left with a bigger question mark. Construction of a larger LNG terminal in this region would pose problems for this project [gas link],” Rafal Wittmann, director of the Development and Investment Division of Gaz-System, said at a news conference in Vilnius on Friday in response to a question whether the gas link project would be justified if Lithuania built a separate LNG terminal in the port of Klaipeda and Riga built a regional LNG terminal.
“I would not like to say that the project would be unnecessary. In our opinion, the gas link would solve more problems than the LNG terminal. The gas link project is more advantageous than the LNG terminal,” he added.
Not an alternative
A gas interconnection between Poland and Lithuania would not be an alternative to a liquefied natural gas (LNG) terminal that is planned to be built in Klaipėda, Lithuanian Prime Minister Andrius Kubilius said on Friday.
"For the Baltic states, it is very important to integrate their pipeline systems into European network. Therefore, I do welcome steps toward the implementation of such a project, but it is not an alternative to the (LNG) terminal (in Klaipėda)," he told reporters.
Prime Minister Kubilius also told reporters that the gas interconnection could receive EU funding.
"We have discussed the project with the Baltic leaders for more than one occasion and we do see a possibility for the project to be co-financed from the EU funds," he said.