Poland, EU Sign Baltic Pipe Funding Deal

Polish Gaz-System (GS) and the European Union (EU)'s Innovation and Network Executive Agency signed an agreement on co-financing the Baltic Pipe construction works under the Connecting Europe Facility, the pipeline operator said April 15.

The 10bn m³/yr line will be operated by the Danish grid operator Energinet, from the Norwegian Europipe terminal in the northwest to the coast at the other side of the country; and from there, GS takes over responsibility. Operations are due to start up at the beginning of the 2022 gas year (October 1) and deliveries of pipeline and LNG will replace Gazprom's exports to Poland of about 10bn m³/yr.

Given the project's EU subsidy ceiling of €266.77mn and the fact that the EU has already paid up €51.45mn for engineering work in the last few years, the EU will pay no more than €215mn, said GS. The money will be allocated for the implementation of construction works both for the offshore pipeline connecting the transmission systems of Poland and Denmark, as well as for the expansion and improvement of the Polish natural gas transmission system.

GS CEO Tomasz Stepien said obtaining the further support confirms "that the Baltic Pipe is of importance not only for Poland, but for the entire European Union. From the point of view of our country the gas connection between Poland and Denmark has the strategic dimension and it is needed to diversify the supplies. The investment is also beneficial for the EU, which seeks to increase trade and competitiveness of the European gas market." 

Poland has been rebuked by gas traders and the European Commission for running a closed shop that makes it difficult for companies to do business there, such as imposing costly storage requirements.