Lithuania delays gas link to Poland

By bne IntelliNews September 26, 2016

Lithuania has put back the scheduled completion date of the GIPL pipeline, whic will link its gas grid with Poland, Vilnius officials announced on September 26.

The decision to delay the launch date of the route by two years to 2021 follows a change to the Polish schedule on the €558mn Gas Interconnector Poland-Lithuania (GIPL), announced by Warsaw earlier this month. Poland wants to shorten the route of its section of the pipeline.

The project is set to finally plug the Baltic gas network into that of the EU. Brussels is pushing to end the region's "energy island" status, bequeathed by Estonia, Latvia and Lithuania's recent history inside the Soviet Union. However, the delay will not help Lithuania's LNG terminal - the only alternative to Russian gas in the Baltics - which is currently making huge losses and needs access to new customers.

Yet Vilnius has now adapted its schedule. The Lithuanian government appears to accept Polish assurances that Warsaw remains committed to the project. Lithuania was alarmed late last year as Poland's enthusiasm appeared to be on the wane.

The EU is expected to finance 60% of GIPL, with the funding coming from Connecting Europe Facility, a programme to help member states build critical infrastructure. It is not clear, however, whether the route and schedule changes will require the project to restart the funding application process. Poland insists that should not happen because the new route is merely a “correction”.

Poland wants to move the starting point of its section of GIPL 160km east. That will see it linked into the Polish network near the border with Belarus rather than close to Warsaw. It is not the first international project that the ruling Law & Justice (PiS) party has been reported to have disrupted since it took power in November. Warsaw and Prague face a rush to resubmit an application for EU funding for the Stork II gas link following delays earlier this year.

Lithuania claimed earlier this month that Warsaw is "blackmailing" it over a power link. Vilnius accuses Warsaw of demanding a discount on rail transport for the local unit of Polish state-controlled oil company PKN Orlen, a charge the Poles reject. While Lithuania introduced the first alternative supply to Gazprom when it launched an LNG terminal last year, it badly needs GIPL and access to the region's only storage facility - Incukalns in Latvia, which is in Russian hands until April - in order to push towards break even.









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