Update on EU-Prioritized Lithuania-Poland Gas Interconnector

The Lithuanian-Polish gas interconnector, an EU priority project, will link the Baltic natural gas transmission grid with the rest of Europe.  Recent updates show there could be some changes to the project’s costs, terms and even the length of the pipeline.

New estimations show the project will take longer significantly and cost significantly more than planned.

Initially slated for 2016-2017, the interconnector may be put off until 2018, hinted Saulius Bilys, director general of Amber Grid, a company operating Lithuania’s natural gas transmission system.

The company was established last summer pursuing the Lithuanian Government’s resolution on unbundling the natural gas transmission activity from other activities.

“The years of 2016-2017 are the likely dates when the gas link may be opened, provided that all the aspects regarding European funding, the regulatory decisions and the northern neighbors’ resolve to participate in the project in one way of another will be worked out promptly,” the Amber Grid CEO said recently.

But now Bilys is reluctant to stick with the date and maintains that until the construction is kicked off all dates are “indicative.”

“The project, known as GIPL, is being implemented according to the planned schedule and does not encounter any problems along the way. At this stage, the preparation of a detailed plan of land for the GIPL has been started. By the end of October, with the efforts of Polish and Lithuanian gas supply transmission operators, the GIPL cost and use analysis will have been done, and then it along with a request on distribution of the investment will be submitted to the respective Baltic States –project partners: Poland, Lithuania, Latvia and Estonia,” Bilys told Natural Gas Europe.

After the countries come to an accord on sharing the financial burden, EU financial support for the project will be sought.

“Taking into account the schedule of works, the launch of the gas transmission interconnector now is planned at the end of 2018,” the Amber Grid head said.

Having assessed the findings of the feasibility study, the GIPL cost and profit analysis and the expenses of the EU additional financing, Bilys has also come up with a slightly higher project’s price tag than the Lithuanian Energy ministry at $634 millioin.

“The new cost is now put at $761 million,” said the director.

In addition, with the new engineering calculations, the gas pipeline link will be reduced from 562 to 532 kilometers.

The new Lithuanian and Polish gas interconnector, along with planned liquefied natural gas terminals in the Baltic region, are expected to significantly reduce the acute dependence of Lithuania, Latvia and Estonia on Russia’s Gazprom gas supplies.

The Russian gas giant currently supplies a whopping 90 percent of Lithuania’s gas needs.

“Our gas link with Poland is strategically important for the entire region,” Lithuanian Energy Minister Jaroslav Neverovic said in a recent statement. “This project will contribute significantly to implementing one of the EU’s main energy policy goals - completing the internal market.”

 The connector is also part of the EU plans for a north-south gas corridor across Central and Eastern Europe linking the Baltic, Black, Adriatic and Aegean Seas.

 Its initial capacity to transport 2.6 billion cubic meters of gas a year can later be increased to 4.4 billion cubic meters, according to Amber Grid.