Commercial interest in Baltic Pipe affirmed

Commercial interest in Baltic Pipe affirmed
By Wojciech Kosc in Warsaw November 1, 2017

Gas shippers have confirmed interest in the planned Baltic Pipe to link Norway with Poland via Denmark by submitting binding bids for 15-year capacity transmission contracts using the pipeline, Polish and Danish gas grid operators Gaz-System and Energinet said on October 31.

The commitments mark the successful end of the second phase of the so-called open season, in which Gaz-System and Energinet gauged interest from companies in the pipeline. The Baltic Pipe is supposed to reduce Poland’s dependence on gas imports from Russia. The final investment decision on building the pipeline, preliminarily scheduled for 2018, appears likelier than ever to be in favour of going ahead with the project.

The Baltic Pipe is expected to become operational in 2022, the year Poland’s long-term contract on gas supplies with Russia ends. The contract is likely not to be renewed, Warsaw has claimed repeatedly.

The total capacity set out in the bids has not been disclosed. In mid-June, the TSOs said that forward demand for using Baltic Pipe must total at least 7.5bn cubic metres (cm) per year in order for construction to kick off. 
Poland’s state controlled oil and gas company PGNiG – on the interest of which the success of the project hinges - said, however, that its bid amounted to PLN8.1bn (€1.9bn). That will likely translate into allocation of the most capacity to the Polish company. PGNiG said earlier it would like to book nearly the entire capacity of the Baltic Pipe. Following economic tests, capacity contracts are expected to be signed by the end of January 2018.

The pipeline will link Poland to gas fields operated by state-controlled utility PGNiG in an effort to further reduce Polish dependence on Russian supplies.

Poland’s alternatives to Russian gas increased last year as the country launched its first LNG terminal that can handle 5bn cm of gas annually. Once the Baltic Pipe is operational, Poland will be able to ship the majority of the 16bn cm of gas it consumes annually from outside of Russia. Warsaw considers Russia a hostile country.

Warsaw also says it is mulling a project to install a floating terminal in Gdansk Bay.  

In August, Poland contracted Ramboll Danmark to carry out the analytical, research and design work necessary to obtain required permits for the construction of the Baltic Pipe.