Diversification of gas supply sources and integration of gas infrastructure in the Three Seas Region

Diversification of gas supply sources and integration of gas infrastructure in the Three Seas Region with the implementation of the altic Pipe project and cross-border interconnections Republic of Poland-Slovak Republic and Republic of Poland-Ukraine

Report:

Year registered: 2018

Type:

Energy

Status:Substantial Progress

3SI countries proposing the project:

Poland

Participating 3SI countries:

Poland, Slovakia

Partner countries:

Denmark, Norway, Ukraine

* not part of the 3Seas Initiative

Main objectives:

Diversification of gas supply sources and integration of gas infrastructure in the Three Seas Region with the implementation of the Baltic Pipe project and cross-border interconnections Republic of Poland-Slovak Republic and Republic of Poland-Ukraine.

Baltic Pipe

Baltic Pipe is a part of the Baltic Energy Market Interconnection Plan (BEMIP). The aim is to create an infrastructure connecting Poland with the Norwegian Continental Shelf through Denmark. The Baltic Pipe will be one of the key sources of natural gas for the Baltic Sea region markets, constituting an alternative to gas supplies from the eastern direction. In this context, the creation of the Baltic Pipe is one of the most important conditions for the success of the BEMIP initiative. After completion of the Baltic Pipe, the Central Eastern Europe (CEE) including inter alia Poland, Slovakia, Ukraine and the Baltic region (Lithuania, Latvia, Estonia and Finland) will gain the opportunity of receiving gas from the Norwegian Continental Shelf. Diversification of gas supplies to both regions could alleviate the dependency on a single, external supplier. A secure supply of gas is also expected to improve the framework conditions for developing a more sustainable energy system by switching from coal to gas.

FSRU project and LNG Terminal in Świnoujście Expansion Program

FSRU project and LNG Terminal in Świnoujście Expansion Program aim at meeting an increasing demand for natural gas in Poland and to guarantee additional import capacities on a regional level. The FSRU and LNG Terminal in Świnoujście Expansion Program are expected to provide an efficient and cost-effective way to enhance diversification and security of gas supplies and to foster competition on regional gas markets. Potentially, if so decided, both projects may in the future also realize functionality for Baltic Sea transportation of LNG such as reloading and bunkering.

Republic of Poland – Slovak Republic Interconnection.

Republic of Poland – Slovak Republic Interconnection is a part of North-South Gas Interconnections Corridor in Central Eastern and South Eastern Europe ("North-South Gas Corridor"). The aim is to create a gas infrastructure for regional connections between the areas of Baltic, Adriatic and Aegean Sea regions, the eastern part of the Mediterranean and the Black Sea, as well as within these regions, also to increase diversification and security of gas supply. The above mentioned initiatives are an alternative to the historically well-established direction of supply on the East-West axis and create opportunities for the emergence of regional markets covering at least several neighbouring countries. Implementation of the above mentioned projects is important not only from the perspective of increasing security and diversification of supplies, but also to counteract the divergence of gas prices between the countries of Central and Eastern Europe and South-Eastern Europe as well as for strengthening the solidarity between the EU Member States.

Republic of Poland – Ukraine interconnection.

Realization of the project will significantly increase the level of the diversification of gas supplies for Ukraine (access to the new sources of natural gas, including the LNG as well as the gas from Norway); level of integration of regional gas markets and establishing a transmission corridor, which will support integration of the regional gas market and enhancement of energy solidarity among EU and Energy Community countries. The main objective of the Project is to establish a flexible transmission infrastructure within the whole CEE region, which will allow for connecting northern and western gas markets as well as the global LNG market with the CEE market. Such a scale effect should positively influence the competition and attractiveness of the region for market participants. In the long-term prospect, the Corridor should provide the construction of the unified market of gas in the region and enhance the energy security. Integration of the regional gas markets (securing access to the EU gas market) will lead to the formation of effective competition mechanisms that would improve the efficiency of business performance to the benefit of natural gas consumers and should ensure an adequate level of wholesale gas prices.

Short description:

The Baltic Pipe

Project involves building of new infrastructure and upgrading of existing one. On the Polish side the main activities are: Construction of bi-directional offshore gas pipeline connecting PL and DK through the Baltic Sea (capacity of approx. 10 bcm/y; length of approx. 275 km – already completed); Construction of the DN1000 onshore gas pipeline connecting the offshore gas pipeline with the national transmission system including the Receiving Terminal (length of approx. 40 km); DN 1000 Goleniów – Lwowek pipeline (PL) of approx. 192 km; Construction of compressor station in Gustorzyn and extension of compressor stations in Goleniów and Odolanów.

Republic of Poland-Slovak Republic Interconnection

The project involves the construction of the following pipelines in Poland: Strachocina - Łupkowska Pass (PL-SK border – already completed) pipeline (DN 1000, 58 km); Pogórska Wola - Tworzeń (DN 1000, 168km – already completed); Strachocina – Pogórska Wola (DN 1000, 98km – already completed); Tworóg – Tworzeń (DN 1000, 56 km - already completed); Gas node in Strachocina – already completed.

The scope of the Project in Slovakia includes the construction of Łupkowska Pass (PL-SK border) - Velké Kapušany pipeline (DN 1000, 103 km – entered final stage of implementation) and modifications of the existing compressor station located at Velké Kapušany.

Republic of Poland-Ukraine Interconnection

The scope of the Project in Republic of Poland includes the construction of: Hermanowice node pipeline to the border crossing point including the additional gas infrastructure; Hermanowice – Strachocina pipeline (DN700, 72 km - already completed); Compressor station in Strachocina, Wronów – Rozwadów pipeline (DN 1000), Rozwadów – Strachocina pipeline (DN 1000).

The scope of the Project in Ukraine includes the construction of Gas pipeline DN1000 from border crossing point (GMS Drozdovychy) to the Western part of Ukraine's GTS in the area of UGSF “Bilche-Volytsya” and construction of additional gas infrastructure.

LNG Terminal in Świnoujście Expansion Program:

Additional regasification installation – increasing the nominal regasification capacity of the terminal to 8.3 billion Nm3/year.

Third LNG process storage tank – increasing the operational flexibility of the LNG terminal installation and ensuring the optimum natural gas process storage capacity.

The second jetty - for loading and unloading of LNG carriers, LNG transshipment and handling LNG bunker vessels and providing bunkering services.

FSRU Gdańsk

The capacity 6.1 billion Nm3/year with the planned commissioning date in 2027 (ongoing analyses concerning possibility of preponement to 2025). Project encompasses FSRU unit (with possibility, if so decided, of installing 2nd unit and thus doubling the capacity), breakwater and several transmission evacuation pipelines: Gdańsk – Kolnik, Kolnik- Gardeja, Gardeja-Gustorzyn.

Contact persons:

Mr. Radosław Sobczak, Ministry of Climate and Environment; radoslaw.sobczak@klimat.gov.pl,

Mr. Michał Homenda, Office of the Plenipotentiary of the Government for Strategic Energy Infrastructure; michal.homenda@mfipr.gov.pl.

Calendar of implementation:

6.2020 - 10.2022
Construction
BALTIC PIPE – Offshore part completed in 2021. All onshore components of the project are currently in final stage of construction.
10.2022
Completed
BALTIC PIPE - The Baltic Pipe is to be commissioned in October 2022.
10.2019 - 05.2022
Construction
POLAND-SLOVAKIA GAS INTERCONNECTION
Construction works, tests and trials on Polish side are completed. Construction on Slovak side is advanced in 99%.
2020-2022
Planning
FSRU- Open Season procedure (one FSRU unit, capacity 6,1 bcm/y) has already been accomplished. The planned date of commissioning of the FSRU with one unit is 2027, although there are ongoing analyses concerning possibility of preponement to 2025. On top of that investor conducts further analyses concerning expansion of the terminal’s regasification capacity up to 12 bcm/y by adding a second FSRU unit. On the onshore part investor is currently obtaining necessary permits.
07.2020 - 03.2023
Construction
LNG Terminal in Świnoujscie Expansion Program - First stage of LNG Terminal Expansion Program - upgrading regasification capacity is completed. Current send-out capacity is 6,2 bcm.
07.2020 - 12.2023
Construction
LNG Terminal in Świnoujscie Expansion Program - Second stage of LNG Terminal Expansion Program – third storage tank and jetty.
Planning
POLAND-UKRAINE GAS INTERCONNECTION
The parameters and business case for the expansion of the interconnection point between Poland and Ukraine is still under consideration.

Budget:

Baltic Pipe:

Total: 716 400 000 €

% of total has secured financing - 100%

CEF - 214 920 000 €

National Funding - 501 500 000 €

Republic of Poland-Slovak Republic Gas Interconnection:

Total: 134 156 000 €

% of total has secured financing - 100%

CEF - 54 089 900 €

National Funding - 80 066 100 €

EIB has granted a common credit line to GAZ-SYSTEM for projects: Poland-Slovakia Gas Interconnection and Gustorzyn-Wronów pipeline.

LNG Terminal in Świnoujście Expansion Program

Total: approx 425 000 000 €

% of total has secured financing - 100%

National Funding - the rest of the cost (own resources of the owner and a loan granted by the Polish TSO - mother company of the owner)

Other EU funding - approx. 128 000 000 €

FSRU in the Port of Gdańsk

An estimated total value of CAPEX and OPEX for the FSRU on Polish Baltic Sea Coast is currently under analysis.

Republic of Poland-Ukraine Interconnection

An estimated total value of CAPEX for the PL-UA Project in Poland (interconnector and expansion of the Polish transmission system including compressor station) ranges between 365-681 mln EUR depending on capacity to be provided.

€1.563B100%
secured

Financing sources:

CEF

National funding

Other EU funding

EIB

Coherence with EU Priorities and Policies

Baltic Pipe, Republic of Poland-Slovak Republic Interconnection, FSRU in Gdańsk

Projects have been granted the status of the Project of Common Interest (PCI status) in line with Regulation (EU) no 347/2013 of 17 April 2013 on guidelines for trans-European energy infrastructure.

Poland-Slovakia Interconnection was granted the priority status in all previous PCI lists published by the European Commission in 2013, 2015, 2017 and 2019 respectively. The Baltic Pipe project and FSRU were granted PCI status also in 2021 (5th PCI list).

Current 2019 PCI list, Baltic Energy Market Interconnection Plan in Gas - ‘BEMIP Gas’):

The 8.3 infrastructure cluster consists of following two PCIs:

8.3.1 Reinforcement of Nybro — Poland/Denmark Interconnection and

8.3.2 Poland–Denmark interconnection currently known as “Baltic Pipe”.

Current 2021 PCI list, North-South Gas Interconnections in Central Eastern and South Eastern Europe (‘NSI East Gas’):

6.27. LNG Gdańsk (PL)

Republic of Poland-Ukraine Interconnection

In October 2016, the Energy Community Ministerial Council adopted a list of Projects of Energy Community Interest (PECIs) and Projects of Mutual Interest (PMIs) based on Regulation 347/2013 on Guidelines for Trans-European Energy Infrastructure. The Gas Interconnection Poland – Ukraine was granted a status of a Projects of Mutual Interest (PMI). The status is underlying the regional importance of the PL-UA Project. Currently the project is under revision.

LNG Terminal in Świnoujście Expansion

Project of Common Interest of project of 2013, 2015 and 2017 PCI lists. Project is consistent with Regulation (EU) no 347/2013 of 17 April 2013 on guidelines for Trans-European energy infrastructure, especially with the objectives of priority Corridor Baltic Energy Market Interconnection Plan in Gas (‘BEMIP Gas’) and priority of North-South gas interconnections in Central Eastern and South Eastern Europe (‘NSI East Gas’) as well as EU's "LNG and storage strategy" carried out by European Commission.

Relevance of the project for the region

The Baltic Pipe project is a key component of the Baltic Energy Market Interconnection Plan and the North-South Gas Corridor. Baltic Pipe will bring a new source of supply to the CEE and 3SI regions that are dependent on one dominant gas supplier. The Baltic Pipe will have a significant impact on the security of supply in the Baltic and Central European regions through diversification of supply sources, routes and counterparts. The project will facilitate the market integration through creation of a well-integrated and functioning market in the Baltic region and Central-Eastern Europe. Ensuring access to the new source of gas (Norwegian gas for the 3SI region) will enhance competition on the regional markets in this part of Europe.

FSRU in Gdańsk and LNG Terminal in Świnoujście Expansion Program

The global LNG market is constantly developing. There are new LNG exporters entering the market. Global LNG trade is expected to increase significantly in the upcoming years. In this case the FSRU in Gdańsk and expanded LNG Terminal in Świnoujście in Poland will allow to receive LNG from the most economically advantageous source of supply under given conditions on the market. It is expected to provide an efficient and cost-effective way to enhance diversification and security of gas supplies in the Central and Eastern Europe and the Baltic Sea region. The projects will also contribute to strengthening energy solidarity between the EU member states located in both regions.

The trends on the global LNG market in conjunction with implementation of the projects under full TPA rule will foster competition in the region, translate into lower prices for gas customers and better align them with those available in North-West Europe (synergy effect in the form of lower prices due to a high level of competition on the LNG supply side and attractive LNG prices).

The additional benefit for consumers arising from the LNG market is vast flexibility when it comes to building a natural gas supply portfolio based on different suppliers and the length of contracts. The terminal will also allow market participants to purchase gas from the spot markets and thus benefit from favourable pricing relationships.

Enhanced access to diversified sources of supply will also decrease dependence of the Baltic and CEE region on the dominant supplier from Russia.

The projects will give rise to the development of new interlinked businesses emerging around LNG services, especially in the maritime and land transport sectors (feeders, cruisers and etc.). In this context, it should also be noted that the LNG bunkering infrastructure in the Baltic Sea is negligible at present. However, the emergence of such investments will incentivise fleet owners to convert ships to LNG.

The projects are also expected to positively influence sustainability with the reduction of pollutant emissions into the air. This concerns emissions coming from high sulphur marine fuels emitting sulphur dioxide and solid particles that are harmful to human health, the environment and responsible for acidic rains. The projects meet the objectives of the so-called sulphur directive.

Republic of Poland-Slovak Republic and Republic of Poland-Ukraine Gas Interconnections

PL-SK and PL-UA Interconnections are missing links that will allow for transmission of gas from LNG Terminal in Świnoujście, Baltic Pipe and FSRU in the Port of Gdańsk to other countries in 3SI region.

In line with the EU North-South Gas Corridor both projects will allow the CEE countries and Ukraine to benefit from the direct access to different gas supply sources from the North, such as LNG terminals in the Baltic Sea (Świnouśjcie LNG, FSRU in the Gdańsk, Klaipeda LNG via Gas Interconnection Poland – Lithuania – GIPL) and Norway (through the planned Baltic Pipe Project connecting Poland with Norway via the Danish transmission system).

Thanks to reaching such a level of complementarity with other projects the planned interconnections will assure diversification of sources and routes, as well as security of gas supplies in the CEE region. They will also enhance the competitiveness on the gas market. Particular attention should be paid at the fact that the interconnections will significantly increase the level of security of supply not only in the directly concerned countries (Poland, Slovakia, Ukraine), but in the whole CEE region, covering most vulnerable eastern EU Member States and Ukraine, especially in light of the current gas crisis.

The projects address the need of enhancing security of supply and promoting market integration through diversification of sources and routes of supply in the region and solidarity among the Member States involved. In case of supply disruptions, PL-SK and PL-UA interconnections will assure natural gas supplies to the CEE countries which will be potentially affected by such interruption.

Whether innovative, safe and sustainable new technologies are to be used

Description of entities involved