Lithuania and Poland Reach Accord on Gas Interconnection Poland–Lithuania
Poland and Lithuania have reached an accord on gas interconnector, GIPL, with the European Commission (EC) helping both sides reach common ground.
“We have managed to finally reach agreement being very strongly supported by the European Commission,” Algirdas Butkevicius, the Lithuanian Prime Minister, told media.
Prior to this, neither side was able to agree on contributions to the project nor on technical issues.
Disagreements were allegedly about Poland’s aim to have the other Baltic countries, especially Lithuania, contribute considerably more to the project.
Last spring, the prime ministers of Lithuania, Latvia and Estonia addressed the EC and Poland, asking them to overcome differences and find a solution for the sake of the interests of all the countries.
The European Commission put GIPL on the strategic energy project list in October 2014.
When built, the gas link should become an important element of the Baltic Energy Market Interconnection Plan, BEMIP, which aims to integrate energy markets of all the states belonging to the Baltic Sea region.
The price-tag of 534-kilometer gas pipeline is 558 million euro, of which 54,9 million euro has to come from Lithuania, 29,4 million- Latvia and Estonia has pledged 1,5 million euro to it.
Lithuania and Poland have asked the European Union to earmark 75 percent of the necessary funding for the project, but the EC has come up with 60 percent.
Besides, AB Amber Grid, Lithuania’s operator of natural gas transmission system, and Poland’s Gas Transmission Operator GAZ System S.A, the GIPL partners, will make contributions.
One hundred seventy seven kilometers of the pipeline will be laid in Lithuania.
Back in June, Lithuanian PM criticized Poland, claiming it used the project as “a means of pressure” against the European Commission in order to get more money from it for a Polish and Czech gas link, the other interconnector Poland is pursuing.
Butkevicius called then on Poland to show more flexibility and willingness in removing the roadblocks from the way to GIPL.
“The implementation of GIPL will erase the European Union’s energy islands and will establish a single energy union. Therefore, it is urgent to resolve the issues of its financing,” the head of Lithuanian Government was quoted as saying by Lithuanian media.
Asked about the hammered-out agreement, Mantas Dubauskas, advisor of Lithuanian Energy Minister Rokas Masiulis, told Natural Gas Europe negotiations on obligations of each of the project partners were ongoing until now.
“We can tell that the financial conditions for Lithuania now will be better than those agreed upon in the sitting of Lithuanian Government,” Dubauskas told but did not elaborate, citing the sensitive nature of tentative agreement.
The Government of Poland has not responded to the query by Natural Gas Europe, though.
In August, GIPL project promoters - Gas Transmission Operator GAZ System S.A. and AB Amber Grid - agreed to conduct the Non-Binding Open Season Procedure.
During this phase, the Polish and Lithuanian gas transmission system operators seek to estimate the market participants’ demand for the firm capacity at the Entry/Exit Point Poland – Lithuania of the GIPL in both directions of the gas flow’ reads a note released on Thursday.
The main aim of the Gas Interconnection Poland – Lithuania Open Season Procedure is to identify market interest which shall be confirmed by long-term pipeline capacity booking as well as to define the optimal way of financing of the project.
GIPL construction works are planned to start in 2016 and to be finished by 2019. The expected capacity of the pipeline is 2.3 billion cubic meters per annum with possibility to expand it to 4.5 billion cubic meters per annum.
In May 2015, the European Union granted financial assistance to the Spatial Planning and Engineering Design Works of the Poland-Lithuania Gas Interconnection project. Under the agreement signed by Lithuania’s AB Amber Grid and Poland’s Gaz-System, the European Union’s Innovation Network Executive Agency (INEA) granted 10.6 million euro under the Connecting Europe Facility (CEF).
GIPL is also thought to boost the prospects of Lithuania’s LNG terminal in the seaport of Klaipeda and Poland’s similar facility in the port of Swinoujscie.
“I believe that such a gas link would be positive not only to the Lithuanian terminal but also to the whole gas situation in the region. First and foremost, with the gas interconnector we see Poland as a gas aggregator, one capable of buying large volumes of energy. The idea is well-received in Europe and Poland is keen on it. If implemented, it would help get discounts for gas purchases,” Rokas Masiulis, the Lithuanian Energy Minister, believes.