(GIPL) State of Play of Gas Interconnection Poland - Lithuania - Status Quo & Further Steps

State of Play of
       Gas Interconnection Poland – Lithuania
                        (GIPL)
                         Status Quo & Further Steps

    Baltic Gas Market Forum
    Tallinn, 3rd November 2016

1

GIPL: original approach
                      The main goals                                 Bi-directional capacities
    • Integrate the isolated gas markets of the Baltic     • PL → LT: 2.4 bcm/y,
      States and Finland into a single EU gas market,
                                                           • LT → PL: 1.7 bcm/y,
    • Diversify gas supply sources, routes and
      counterparties,                                      • Capacities might be enhanced substantially, if
    • Increase security and reliability of gas supplies,     constructing additional compressor stations.

                       Infrastructure
    • More than 500 km pipeline (DN 700): 357 km on
      PL side and 177 km on LT side
    • Expansion and development of Compressor’s
      capacities in PL

                            CAPEX
  • Expected originally planned CAPEX : EUR 558
    million – EUR 136 million on LT side, EUR 422
    million on PL side (subject for review),
  • Substantial external financing:
  – More than EUR 300 million of EU co-financing
    from CEF via 2 grants,                                  •   Commissioning year – 2019
  – Part of investment in PL will be covered by cross-
    border cost allocation (CBCA) payments from
2   Baltic States (up to EUR 85.8 million).

GIPL PROJECT – NEW TECHNICAL APPROACH ON POLISH SIDE
      Project’s technical capacity - overview
    Due to new technical approach on Polish side,
    number of technical (hydraulic) analysis were
    prepared for identification changes of potential
    capacity level, comparing to previous approach.
    In this terms, some differences were indicated
    concerning on LT-PL flow direction.

    ► For PL-LT flow direction, level of capacity remains
      unchangeable (2.4 bcm/y, 275 tcm/h), taking
      into account using existing infrastructure on CS
      Hołowczyce
    ► For LT-PL flow direction, level of capacity could
      increase - taking into account i.a. shorter section
      of GIPL pipeline on PL side, comparing to
      previous technical approach

                        GIPL pipeline (PL side)
           ---------------------------------------------------
                   General technical parameters
        Previous approach                     New approach
              DN700                               DN700
           MOP 8,4 MPa                        MOP 8,4 MPa
            Start Point:                       Start Point:
        CS Rembelszczyzna                    CS Hołowczyce

3

GIPL PROJECT – NEW TECHNICAL APPROACH ON POLISH SIDE
    Polish Transmission System Operation – today

                                   The flow scenario which includes gas supplies
                                   from east is presented in the figure. As it may be
                                   observed gas supplies from east constitutes
                                   important role in system operation. The entry
                                   points to system in analysed case are:

                                   ► Eastern direction
                                         ► Belarus
                                         ► Ukraine
                                         ► SGT
                                   ► LNG Terminal in Świnoujście
                                   ► Czech Republic
                                   ► Germany
                                         ► (Lasów)
                                         ► (Mallnow)

4

GIPL PROJECT – NEW TECHNICAL APPROACH ON POLISH SIDE
    Polish Transmission System Operation – new Corporate Strategy

                                       According to the new Corporate Strategy of
                                       GAZ-SYSTEM towards 2025 the gas transmission
                                       system in Poland will be able to be operated
                                       without gas supplies from eastern direction.
                                       The new entry capacities located in Northern
                                       Poland will be sufficient to supply the system.

                                       The scenario assumes gas supplies from:

                                         ► LNG Terminal in Świnoujście
                                         ► Baltic Pipe
                                         ► Czech Republic
                                         ► Germany:
                                              ► (Lasów)
                                              ► (Mallnow)

5

GIPL: Multiple Benefits for the Region

                                    • Integration of gas markets of the Baltic
                                      States and Finland into a common EU gas
                                      market
                                    • Diversification – access to alternative gas
                                      supply sources, routes, counterparties and
                                      increase of competition
                                    • Increase of security of gas supply – both in
                                      terms of additional interconnection
                                      capacity and possibility to apply solidarity
                                      measures between Member States
                                    • Benefiting the use of LNG terminals –
                                      enabling more flexible and efficient use of
                                      LNG infrastructure in Poland and Lithuania
                                    • Enhancing liquidity both in Polish and
                                      Baltic gas hubs and strengthening their
                                      regional role

6

GIPL implementation: current status

      In Lithuania:
           Preparatory works (EIA, land use planning, engineering) fully accomplished
           Construction permissions have been obtained in Aug-Sept 2016

       In Poland:
            Works on Environmental Inventory and natural valuation are completed (for „old”
              route)
            Decision taken that current contractor will obtain environmental decision for the
              whole “old” route and for the section, which is assumed as common for the “old” and
              “new” GIPL route, it will complete the full scope of engineering works, incl. obtaining
              building permit – works are ongoing
            Variants of the „new” GIPL route determined based on on-site evaluation for purpose
              of technical feasibility study.
            Scope of the technical feasibility study and environmental inventory and natural
              valuation was elaborated and agreement with a contractor is about to be signed (no
              public procurement rules applied)
       Common Actions:
          Joint amendment request of the Grant Agreements to INEA – Nov 2016

7

GIPL: following steps in 2017

    • Signing of Inter-TSOs Agreement between Baltic and
      Poland TSOs on CBCA compensations
    • Signing of Connection Agreement by Project Promoters
    • Launch of tenders for pipe purchase & construction
      works on Lithuanian side
    • Completion of technical feasibility study regarding the
      new technical approach on Poland side

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Thank you.
Questions?