10.02.2012

The Business Case Analysis of Gas Interconnection Poland – Lithuania finalized

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 told.

”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.

More information on the project and the preliminary characteristics of GIPL are provided in the brochure. (link to the .pdf version)

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AB Lietuvos Dujos is engaged in the following core business activities: natural gas import and sales to consumers, gas transmission and distribution services, balanced and economically justified development of the natural gas supply infrastructure. The Company controls assets worth over LTL 2.5 billion. AB Lietuvos Dujos operates 1.9 thousand km of gas transmission pipelines, 8.1 thousand km of gas distribution pipelines, 65 gas M&R stations, 3 gas metering stations and 2 gas compressor stations. The Company supplies natural gas to heat and power generation, industrial, and other enterprises and organizations as well as residential consumers of natural gas. The Company supplies approx. 40% of the total gas volumes consumed in Lithuania. AB Lietuvos Dujos is also engaged in natural gas transit to the Kaliningrad Region of the Russian Federation. The average staff size of the Company is 1.7 thousand; the number of its customers exceeds 550 thousand. In the last decade AB Lietuvos Dujos invested more than LTL 1 billion in Lithuanian gas infrastructure.
 
AB Lietuvos Dujos carries out its activities in accordance with the socially responsible business principles and in its activities lays a stress on environmental protection, respect to the Company’s customers’ and employees’ rights, promotion of the economic development and active participation in the social life. The Company participates in various voluntary actions, which are often initiated by the Company’s employees themselves, and supports cultural initiatives of communities. AB Lietuvos Dujos is one of the biggest tax payers in Lithuania.

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The Gas Transmission Operator GAZ-SYSTEM S.A. is a strategic, wholly-owned State Treasury company responsible for the transmission of natural gas throughout Poland. The Company manages assets worth approx. 5 bn PLN, comprised of elements of the transmission system, e.g. over 9.7 thousand km of high pressure pipelines, 15 compressor stations, 56 hubs and 970 exit points. The Company employs over 2,000 people. GAZ-SYSTEM S.A. is also the owner of the Polskie LNG S.A. Company, which was established to construct the liquefied natural gas terminal (LNG) terminal in Świnoujście.

GAZ-SYSTEM S.A. is planning to build over 1,000 km of new gas transmission pipelines by 2014. The most important will be constructed in North Western and Central Poland (Szczecin-Lwówek, Swinoujscie-Szczecin, Szczecin-Gdansk, , Rembelszczyzna-Gustorzyn, and Gustorzyn-Odolanów) . The development of the gas transmission network in Poland may constitute an important element of the North-South Gas Corridor connecting the LNG terminal in Świnoujście with the planned Adria LNG terminal through the transmission infrastructure of Central European countries.

In 2011, GAZ-SYSTEM S.A. completed the construction of the Włocławek-Gdynia gas pipeline, the gas compressor station in Goleniów and  in Jarosław. The company has also started up the new Polish - Czech Interconnector which will enable the transport of approx. 0.5 bcm of gas annually. GAZ-SYSTEM S.A. also developed gas pipelines in Lower Silesia, in order to enable the off-take of greater volumes of gas from the western direction. It is possible to transport up to 1.5 bcm of gas annually (earlier capacity amounted to 0.9 bcm of gas annually) via the Lasów point on the Polish - German border

 The investments completed by GAZ-SYSTEM S.A. in 2011, along with the possibility of using virtual reverse flow services on the Yamal pipeline, have created the technical capability for the import to Poland of over 3.3 bcm of gas annually from new sources (approx. 30% of the current imports).

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For contacts:
Sigita Petrikonyte – Jurkuniene, Spokesperson
AB Lietuvos Dujos
Tel. (+370 5) 236 02 58, mob. (+370) 699 07870
e-mail: spj@lietuvosdujos.lt
 
Małgorzata Polkowska, Press Spokesperson
GAZ-SYSTEM S.A.
Tel. (0048 22) 220 17 55, mob. (0048) 691 911 217
e-mail: pr@gaz-system.pl


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