The pipe supplier will be consortium led by Ferrum S.A., which was selected under the public procurement procedure. The pipes will be supplied within 6 months starting form the date of contract signature.

As the result of this contract, GAZ-SYSTEM S.A. will be able to complete the construction works on the 40 km long gas pipeline Taczalin-Radakowice-Gałów in 2010, and put it into operation in 2011.

The construction of new gas pipelines in Lower Silesia will ensure transmission of larger amounts of natural gas through Lasowo hub from Germany by the end of 2011. As a result thereof, Poland will be able to receive additional 0.5 billion cu. m. of gas from the western direction. The existing Lasowo hub capacity allows to receive about 0.9 billion cu. m. of gas per year.

“The development of Lower Silesia gas pipelines is a key project which allows to increase gas transportation capacities from Germany. The project is an element of the internal Polish transfer infrastructure development and, at the same time, it fits well in the EU policy of developing an integrated natural gas transfer network in Europe” – said Jan Chadam, President of GAZ-SYSTEM S.A. Management Board.

The development of the gas pipelines system in Lower Silesia has been granted the European Commission subsidy of EUR 14.4 billion under the European Energy Programme for Recovery (EEPR, Recovery Plan) which is to contribute to the economic recovery in the European Union and to an improved security of energy supply through the construction of cross-border infrastructure. The EU funds will be spent on construction of the Taczalin–Radakowice–Gałów gas pipeline as well as on the renovation of Dziwiszów-Taczalin gas pipeline, construction of Jeleniów II Gas Compression Station, and development of the Lasowo link. In total, over 200 km of new pipelines for natural gas transmission will be constructed in Lower Silesia.

Apart from the Lasowo link extension, GAZ-SYSTEM S.A. is constructing a gas pipeline connection with the Czech Republic; it will be the second interconnector between Poland and the EU gas supply system and will ensure transmission of about 0.5 billion cu. m. of natural gas per year. The pipeline on the Polish territory will be about 20 km long. The planned pipeline length on the Czech territory is about 10 km.

GAZ-SYSTEM S.A. intends to build over 1000 km of new transmission pipelines by 2014. All strategic pipelines are now under construction. The key sections will be constructed in north-western and central Poland (Szczecin-Lwówek, Świnoujście - Szczecin, Szczecin – Gdańsk, Włocławek – Gdynia, Rembelszczyzna – Gustorzyn, Gustorzyn - Odolanów).

In view of a huge scope of works, GAZ-SYSTEM S.A. has decided to purchase pipeline construction materials (i.e. pipes and valves) directly from the manufacturer in order to optimise project implementation. Therefore, the Company will avoid additional margins and make considerable savings. This is the Company’s strategy to improve its cost effectiveness.

The ceremony of signing the agreement was participated by the diplomatic corpus representatives, MPs, senators, representatives of the government administration, banks and the media. On behalf of the investor, the contract was signed by the President of the Board of LNG S.A., Zbigniew Rapciak, while the signatures on the agreement were affixed by:  Pierre Berger from the Saipem Group, Paolo Bigi, representing Techint and Tomasz Woroch from Grupa PBG as the contractor's representatives.

The agreement value amounts to PLN 1,9646,559,860, gross (PLN 2,415,213,000, net).

"Signing this agreement, and the preceding passing of an appropriate bill which regulates and simplifies the procedures involved in the terminal construction, obtaining an environmental decision and a construction permit prove that the many years of talking on the need for  diversification is becoming reality right now. Constructing the LNG Terminal shall provide Poland with greater independence in the selection of natural gas suppliers, since thanks to it we shall be able to receive gas over the sea and fulfil the contracts concluded with Qatar. The investment being carried out by us is the first of this type in our part of Europe" - said Aleksander Grad, the Minister of State Treasure. The objective of the consortium is to construct an LNG terminal in Świnoujście, together with delivering it for occupancy, by 30th June 2014.

The companies included in the winning consortium have the experience already gained with constructing several LNG terminals in the world, including but not limited to: Canaport LNG (Canada), Freeport (USA), Terminal Guandong (China), Pyeongtaek LNG (South Korea)., Zeebrugge (Belgium),  Bilbao (Spain), Marmara LNG (Turkey), Fos Cavaou LNG (France). "Thanks to the LNG terminal we shall be able to gain in the future even up to 7.5bn m³ of gas over the sea, which shall approximately account for 50% of the annual demand of Poland for gas. The LNG Terminal does not mean just energetic independence, but also new professional development opportunities. Its execution has created an incentive to form the European Centre for LNG Training in Szczecin and Świnoujście which is going to train top class specialists, not just for the needs of the Polish gasport," said Zbigniew Rapciak, the President of the Polskie LNG S.A. "I would like to thank all the companies for participating in the proceeding and for professional offer preparation. I would like to thank all the fellow employees and partners for their involvement in the execution of this project," added Z. Rapciak. 

The construction of the LNG Terminal  has been deemed as a strategic investment for the energetic security of the state by the Government of the Republic of Poland.

The LNG Terminal is going to be raised in Świnoujście, on the grounds designated for the harbour development. It is going to allow for receiving up to 5bn m³ of natural gas annually, with a possibility of its extension up to 7.5bn m³.

The construction of the LNG Terminal in Swinburne is the first investment of this type not only in Poland, but also in our part of Europe. "The terminal for receiving liquefied natural gas in Świnoujście is one of the major investments of the broad investment plan with regard to the development of gas infrastructure in Poland executed by GAZ-SYSTEM S.A. The Agreement signed today completes the formal preparatory stage and commences the next development phase. The construction of the new LNG Terminal and new gas pipes and cross-border connections executed by our company will allow in the future other CEE countries to have access to the global liquefied natural gas market with the use of the Polish streaming infrastructure," said Jan Chadam, the President of the Board of GAZ-SYSTEM S.A. - the company which coordinates the whole investment.

Commencing the construction of the terminal is scheduled for the second half of 2010, and its completion - on 30^th June 2014.

* * *

Polskie LNG S.A. is an investment vehicle established to construct and exploit the liquefied natural gas LNG terminal in Świnoujście. The Polska LNG company was set up in 2007 as an element of the strategy aimed at diversifying gas supplies to Poland. It is owned by Operator Gazociągów Przesyłowych GAZ-SYSTEM S.A. - a State Treasure Company.

6^th August 2009 The Polskie LNG S.A. Company began the procedure of selecting the general contractor for the investment.

By 30^th September 8 applications for participation in the proceeding had been submitted by entities encompassing 25 companies from 9 companies

On 9^th November 2008 three entities were qualified to the final stage: the consortium of Saipem S.p.A (Italy) - Saipem SA (France) - Techint Compagnia Tecnica Internazionale S.p.A. (Italy) - Snamprogetti Canada Inc. (Canada) - PBG SA (Poland) - PBG Export Sp. z o.o. (Poland); the consortium of Tecnimont S.p.A (Italy) - Polimex Mostostal SA (Poland) - Sofregaz SA (France) - Vinci Consortium Grands Projets Sas (France) - Entrepose Contracting SA (France); the consortium of Daewoo Engineering & Construction Co Ltd. (Korea) - Korea Gas Corporation (Korea) - Daewoo Engineering Company (Korea).

On 4^th February 2010 all the three consortia submitted preliminary offers, and on 21^st June 2010 - the final offers, including the price offers.

On 24^th June 2010 the Polskie LNG S.A. made the selection of the entity which is supposed to build the LNG Terminal in Świnoujście (the General Investment Executor). The proceeding has been won by the consortium of Saipem S.p.A. (Italy) - Saipem SA (France) - Techint Compagnia Technica Internationale S.p.A. (Italy) - Snamprogetti Canada Inc. (Canada) - PBG SA (Poland) - PBG Export Sp. z o.o. (Poland), which submitted the most favourable offer with the lowest total gross price: PLN 2,946,559,860.

The entities participating in the proceeding could file possible appeals by 5^th July 2010. No appeal had been submitted.

The proceeding had been conducted pursuant to the Act of 24^th April 2009 on the investments with regard to the regasification terminal of liquefied natural gas in Świnoujście (the so-called Special Act). It was prepared in compliance with the rules arising from European directives which assume that orders shall be placed in an honest and transparent manner with respect for the rights of the proceeding participants, in accordance with the terms and conditions of fair competition - in an open, upright, transparent and non-discriminatory procedure.

GAZ-SYSTEM S.A. and PGNiG SA maintain a constant contact with dispatcher services of the Belarusian transmission system operator Beltransgaz and with the gas supplier Gazprom Export.

If gas transmission through Belarus changes, you will be notified of this in another communication.

Hewitt collected the opinions of 123,000 employees and 2,700 representatives of the executive management in as many as 700 organisations in Central and Eastern Europe.  The survey was conducted on companies that have been operating on the market for ate least two years and employ a minimum 50 employees.

Read more about GAZ-SYSTEM S.A.'s participation in the Best Employer study.

The Jeleniów – Dziwiszów gas pipeline stretching 65 kilometres in length will be located in the Lower Silesian Voivodship. The investment constitutes a significant element strengthening the security of gas supplies to Poland and creating the technical infrastructure necessary to transport gas to other directions apart from the East.

The object of the contract concluded with the Oil and Gas Institute is the granting of funds for the construction of the "Jeleniów – Dziwiszów” gas pipeline in the amount of 65.099,700.00 PLN, constituting over 43% of the total qualified costs incurred during the course of the realisation of the investment.

The design documentation of the gas pipeline is currently being prepared.  The date of completion of the civil engineering design along with obtaining the building permit is expected to take place in October 2010. The date of completion of the construction of the gas pipeline is planned for 2011.

Apart from the Jeleniów – Dziwiszów gas pipeline, GAZ-SYSTEM S.A. is also fulfilling other gas pipeline investments in Lower Silesia:  the Polkowice – Żary and Taczalin – Radakowice – Gałów gas pipelines. The fulfilment of these investments will guarantee greater reliability and flexibility of the gas transmission system in the region.  They will also enable the off-take of increased amounts of gas in the Lasów point on the Polish-German border.  

Large infrastructural investments in the field of environmental protection, transport, energy, culture and national heritage, health protection and higher education are realised within the Operational Programme Infrastructure and Environment 2007-2013 (OPIE). The Włocławek-Gdynia gas pipeline has already been financed by the Programme.  Apart from that, the following gas pipelines are foreseen on the primary list of investments of GAZ-SYSTEM S.A. planned for additional funding: Szczecin – Gdańsk, Gustorzyn – Odolanów, Szczecin – Lwówek, Rembelszczyzna – Gustorzyn, and Polkowice – Żary. The planned amount of additional financing for the investments of GAZ-SYSTEM S.A. stipulated on the list of primary investments of (OPIE) amounts to approx. 1.2 bn PLN. The following gas pipelines are also included on the reserve list:  Strachocina – Pogórska Wola, Hermanowice – Strachocina, Zdzieszowice – Wrocław, and Skoczów – Komorowice – Oświęcim.

***

The Company is planning to build over 1,000 km of new gas transmission pipelines by 2014. All the strategic gas pipelines are already in the course of fulfilment.   The most important will be constructed in North Western and Central Poland (Szczecin-Lwówek, Świnoujście - Szczecin, Szczecin – Gdańsk, Włocławek – Gdynia, Rembelszczyzna – Gustorzyn, and Gustorzyn - Odolanów). The last section of the Włocławek – Gdynia pipeline is currently under construction.  The remaining gas pipelines in North Western and Central Poland are on the stage of preparation of the design documentation, encompassing the civil engineering design along with obtaining building permits.  The design documentation will be completed in 2011, after which invitation to tenders shall be published for the construction of those gas pipelines. 

GAZ-SYSTEM S.A. is also fulfilling the construction of a new interconnector between Poland and the Czech Republic.

***

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 in excess of 5 bn PLN comprised mainly of elements of the transmission system, e.g. more than 9.7 thousand km of high pressure pipelines, 14 compressor stations, 56 hubs and 970 exit points. The Company employs 2,000 people.

GAZ-SYSTEM S.A. is the owner of the LNG S.A. Company which was appointed to construct and operate the liquefied natural gas terminal (LNG) in Świnoujście.

The transmission service fee rate will increase by an average 3.4% in relation to the previously binding tariff.  There has only been a several percent impact of the gas transmission fee on the final price paid by natural gas Customers.  

Gas transmission fees are the basic source of revenues of GAZ-SYSTEM S.A., however, the costs of the Company taken into account in the tariff have not risen despite numerous planned investments.  The adjusted revenue of the Company remains on the same level in relation to last year.

Transmission fee rates are calculated based on the volume of transmitted gas. In 2009, GAZ-SYSTEM S.A. transmitted approx. 5% less gas in comparison to 2008.  Therefore, despite maintaining Company costs and adjusted revenue on the same level, the average transmission fee rate per 1 m3 of gas has increased only slightly.   

The Company is planning to build over 1,000 km of new gas transmission pipelines by 2014. Strategic gas pipelines will be constructed in North Western and Central Poland (Szczecin-Lwówek, Świnoujście - Szczecin, Szczecin – Gdańsk, Włocławek – Gdynia, Rembelszczyzna – Gustorzyn, Gustorzyn - Odolanów). The Company is also building a new Poland – Czech Republic interconnector and is developing the gas transmission pipes in Lower Silesia, which will enable the off-take of increased amounts of gas through the Lasów point on the Polish-German border. 

GAZ-SYSTEM S.A. is the owner of the LNG S.A. Company which was appointed to construct and operate the liquefied natural gas terminal (LNG) in Świnoujście.

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 in excess of 5 bn PLN comprised mainly of elements of the transmission system, e.g. more than 9.7 thousand km of high pressure pipelines, 14 compressor stations, 56 hubs and 970 exit points. The Company employs 2,000 people.

The Szczecin – Gdańsk pipeline will measure approximately 265 km in length and is designed to have a diameter of 700 mm. The pipeline will be developed in the West Pomerania and the Pomerania regions and will become the longest pipeline among those foreseen in the GAZ-SYSTEM S.A. investment plan to 2014.

It is expected that the project documentation will be completed (construction design and final design, inclusive of the investment location decision and the building permit) in the second half of 2011 following which it will be possible to announce a tender for the pipeline construction. According to the investment time schedule, the completion of the pipeline is planned for 2013.

The construction project of the Szczecin - Gdańsk pipeline is listed for funding from the Operating Program Infrastructure and Environment 2007-2013 approved by the European Commission on 7 December 2007. The forecasted subsidy amount is 302.11 M PLN.

GAZ-SYSTEM S.A. is also preparing construction designs and final designs for its other strategic pipelines, such as the pipelines of Świnoujście-Szczecin, Szczecin-Lwówek, Gustorzyn-Odolanów, Rembelszczyzna-Gustorzyn, Jeleniów–Dziwiszów, Taczalin–Radakowice-Gałów, Polkowice-Żary. The construction of the final sections of the Włocławek-Gdynia pipeline is also underway.

The Świnoujście - Szczecin pipeline represents a crucial element in the development of the cross-border transmission infrastructure in the Baltic area. The pipeline will enable the transmission of gas from the LNG terminal in Świnoujście for interested companies from the Nordic area once the planned Baltic Pipe interconnection of the Polish transmission system with the Danish transmission system takes effect. The development of the cross-border infrastructure in the Baltic area will provide the Nordic states access to the global market of liquefied natural gas (LNG) through the Polish re-gasification infrastructure in Świnoujście.

The construction of the Świnoujście-Szczecin pipeline will be subsidized from the EU program "European Energy Plan for Recovery" which is meant to contribute to the economic recovery in the European Union and improve energy supply safety thanks to cross-border infrastructure.

The Świnoujście - Szczecin pipeline will measure approximately 80 km in length and 800 mm in diameter. The construction and execution project contractor of the investment has been selected through public tender. The agreement for the construction and execution project preparation related to the pipeline has been concluded with Biuro Studiów i Projektów Gazownictwa GAZOPROJEKT S.A. (Design and Gas Project Company) seated in Wrocław.

The tasks of the project contractor include the acquisition of an investment location decision and a binding building permit. It is expected that the project documentation will be completed along with the acquisition of the building permit in the middle of 2011 upon which it will be possible to announce a tender for pipeline construction. The investment time schedule provides that the construction work will be completed in 2013. 

The Szczecin - Świnoujście pipeline is part of the extensive investment plan of GAZ-SYSTEM S.A. The company intends to build more than 1000 km of new transmission pipelines by 2014. Strategic pipelines will be developed in the northwest and central part of Poland (Szczecin-Lwówek, Świnoujście - Szczecin, Szczecin - Gdańsk, Włocławek - Gdynia, Gustorzyn - Odolanów, Rembelszczyzna - Gustorzyn). The construction of the new compressor station in Goleniów is also planned to finish in 2010 enabling the transmission of larger volumes of natural gas in this region.

***

Gas Transmission Operator GAZ-SYSTEM S.A. is a strategic company to the Polish economy responsible for the transmission of natural gas in Poland. The company manages assets valued at app. 5 bn PLN comprised predominantly of the main elements of the transmission system with more than 9,700 km of high pressure pipelines, 14 compressor stations, 56 hubs and 970 exit points. The company employs 2,000 people.

Besides the development of the national transmission system, GAZ-SYSTEM S.A. is also realizing the construction of a new interconnector between Poland and the Czech Republic. Pipelines in Lower Silesia are also being developed enabling the delivery of increased natural gas volumes through the point Lasowo located at the Polish-German border.

GAZ-SYSTEM S.A. is also the owner of Polskie LNG S.A. which was established for the purpose of building and operating the liquefied natural gas (LNG) terminal in Świnoujście.

The following three projects run by GAZ-SYSTEM S.A. were included in the Recovery Plan financing:   

1. The Skanled/Baltic Pipe Project.

The grant application was submitted by GAZ-SYSTEM S.A. in cooperation with the Danish transmission system operator Energinet.dk. GAZ-SYSTEM S.A. has applied for financing for the project in the amount of 50 mln EUR. It has been designed to reinforce the Polish transmission system in the vicinity of the construction site of the planned Baltic Pipe and to facilitate the connection of this gas pipeline with the LNG terminal in Świnoujście.  This infrastructure will enable the future free re-gasification capacity to be offered at the Polish LNG terminal in Świnoujście for entities on the European market. The connection of the LNG terminal via the Polish transmission system with the Baltic Pipe gas pipeline will provide Scandinavian countries with access in the future to the global liquefied natural gas (LNG) market.  The Gas Compressor station in Goleniów along with the Świnoujście-Szczecin gas pipeline will also be financed within this project.

2. The development of the gas pipeline system in Lower Silesia as key investments increasing gas transport possibilities from the direction of Germany.

GAZ-SYSTEM S.A. has applied for 14.4 mln EUR financing for this project. The obtained funds will be allocated for the modernisation of the Dziwiszów-Taczalin gas pipeline, the construction of the Taczalin-Radakowice-Gałów gas pipeline and the Jeleniów II Compressor station as well as the expansion of the Lasów point. These investments will help increase the import of gas to Poland from the German direction up to 1.5 bn m3 annually from 2011.

3. The Poland-Czech Republic gas system connection in the Cieszyn region.

GAZ-SYSTEM S.A. submitted the funding application for this project jointly with the Czech transmission system operator RWE Transgas Net. The value of the funding allocated to the part of the investment carried out by GAZ-SYSTEM S.A. has been estimated at 10.5 mln EUR. The investment will be completed in 2011 and will enable 0.5 bn m3 of gas to be transmitted from the new direction of supply.

Additionally, 80 mln EUR reserved in the budget of the European Commission for the Recovery Plan has been allocated for the construction of the LNG terminal in Świnoujście. This application was filed by the subsidiary of GAZ-SYSTEM S.A. (Polskie LNG S.A.) in the amount of 55 mln EUR and by the Szczecin and Swinoujscie Seaports Authority in the sum of 25 mln EUR.

An important assessment criterion of the application was the advancement of the projects and their possible quick completion. Today's decision of the European Commission means that the applications for funding of the selected projects under the European Energy Programme for Recovery (EEPR) submitted by GAZ-SYSTEM S.A. received a positive assessment by the Commission.

The next stage will be the signing by the European Commission of the individual decisions concerning assistance granted to the given projects that will include detailed provisions outlining the conditions of the EU funding within the Recovery Plan.  

The positive assessment given by the European Commission to the applications submitted by GAZ-SYSTEM S.A. proves that the projects presented by the company are in line with the EU policy for creating an integrated natural gas transmission network, raising gas supply security within the EU and building a common European energy market.

 The scope of projects being fulfilled by GAZ-SYSTEM S.A. proves that the company is a significant partner in developing the gas infrastructure in this part of Europe. All the projects being fulfilled within the Recovery Plan not only refer to the development of the internal transmission infrastructure in Poland but also significantly concern the development of the gas transport network in the European Union. It is also worth noting that the majority of these projects are realised in cooperation with partners from other European Union countries.

The construction of the Jarosław II Compressor Station is one of the elements of GAZ-SYSTEM S.A.'s long-term investment plan intended to strengthen the National transmission system and improve the security of gas transmission in Poland.  The Company is planning to build over 1,000 km of new gas transmission pipelines by 2014.

The new structure will replace the currently operating compressor station. The capacity of the new Jarosław II Compressor station will be 300,000  m³/h. The works will be performed by a consortium of companies represented by Control Process S.A selected by an open procurement procedure. The Agreement will include the comprehensive performance of the project and completion of the compressor station under an EPC contract. The works will be completed within 18 months.

The Jarosław Compressor Station Complex is located on the outskirts of the City of Jarosław in the Subcarpathian Voivodship.  The Jarosław I compressor station whose current capacity amounts to 360,000 m³/h also operates in this region.

The compressor station compresses imported gas transmitted from Ukraine through the Drozdowicze - Hermanowice hub and from domestic deposits located in the Jarosław - Przemyśl region.