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Vilnius, 25 November 2015
Paweł SękGas Transmission Operator GAZ-SYSTEM S.A.
Gas Interconnection
Poland – LithuaniaTool for the regional gas market integration
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2
PROJECT PROMOTERS:
► PL - GAZ-SYSTEM S.A.
► LT - AB Amber Grid
PROJECT CAPACITY:
► Towards LT – 2.4 bcm/y, towards PL – up to 1.7 bcm/y
ROUTING:
► Rembelszczyzna (PL) – Jauniunai (LT) pipeline
LENGTH:
► In total 534 km (PL: 357 km, LT: 177 km)
PLANNED IN OPERATION:
► beginning of 2020
KEY DECISIONS:
ECSource: EY
Rembelszczyzna [PL]
Jauniunai [LT]
PL [Rembelszczyzna] –
LT [border ]:
357 km
LT [border] –
LT [Jauniunai]:
172 km
The selected GIPL route
Existing transmission infrastructure
Key locations for GIPL
LT [border] – LT [Jauniunai]:
172 km
PL [Rembelszczyna] – LT [border]:
357 km
Polish TSOA
Lithuanian TSO
B
A
B
C
1
2
3
LT [border] – LT [Jauniunai]
177 km
DECISION ON PCI STATUS FROM 14 OCTOBER 2013
ACER DECISION ON CBCA FROM 11 AUGUST 2014
EC DECISION ON CEF ALLOCATION FROM 29 OCTOBER 2014
PROJECT SCOPE ON PL SIDE
TYPE LOCALISATION PARAMETERS
PipelineRembelszczyzna –
PL/LT border
DN 700, L = 357
km
Compressor
StationRembelszczyzna P = 6,8 MW
Compressor
StationGustorzyn P = 6,7 MW
1
2
3
GAS INTERCONNECTION POLAND – LITHUANIA
KEY HIGHLIGHTS OF THE GIPL PROJECT
D CEF GRANT AGREEMENT FROM 15 OCTOBER 2014
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3
Based on the Feasibility Study the GIPL-related CAPEX (Stage I) was estimated at the level of 558 EURm, there of 422 in Poland (76%) and 136 EURm in Lithuania (24%)
Percentage of total CAPEXXX%
24%
76%
APPROACH TO CONSTRUCTION:
► A gradual approach to GIPL implementation is proposed with plans to commission the 2.4 bcm/y pipeline in 2020.
► Depending on market developments, there is a possibility to increase the maximum load to 4.1 bcm/y by constructing additional compressor stations.
CAPEX:
► GIPL-related CAPEX (Stage I) was estimated at the level of 558 EURm, thereof 422 in Poland (76% of the total CAPEX of the Project) and 136 EURm in Lithuania (24%)
► Each TSO would be responsible for the construction of that part of the pipeline that is physically located in that TSO’s country.
B
A
Division of GIPL CAPEX [Stage I, EURm, undiscounted nominal terms]
558
136
422
Source: GAZ-SYSTEM analysis
GAS INTERCONNECTION POLAND – LITHUANIA
KEY HIGHLIGHTS OF THE GIPL PROJECT
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4
GIPL is a measure for diversification of gas supply routes and sources to Baltic States, ending isolation from internal EU gas market and contributing to enhance security of gas supply
► GIPL is part of the Baltic Energy Market Interconnection Plan (BEMIP).
► GIPL will allow to achieve sufficient cross-border capacity between the EU and Baltic States.
► GIPL will integrate the gas markets in the Baltic Sea region with the internal EU market. GIPL willcontribute to the improvement of market competition and security of gas supply.
Formation of an Internal Energy
Market
2
► Connecting the Baltic region to EU gas market.
► Ensuring the import of natural gas from alternative sources in quantities covering a significantpart of Baltic States’ demand.
► End of physical isolation of Baltic States from EU market.
Connection of isolated energy
markets in Europe
3
► GIPL foundation for development of energy solidarity between EU member countries in case ofgas disruption in the region.
► Possibility to direct additional gas volumes to Baltic States via GIPL, which together withIncukalns storage capacities (available to Baltic States) can significantly increase the energysecurity of the region.
► GIPL reduces the risk of unavailable capacity for an emergency supply.
Strengthening EU Member States’ energy solidarity
4
► Construction of GIPL aims at creating a number of new supply sources of natural gasto the region (European spot and long term markets).
► Decreasing dependence on current supply source.
► Increasing security of gas supply for Baltic States at reasonable cost.
Diversification and security of
gas supply
1
GAS INTERCONNECTION POLAND – LITHUANIA
KEY REASONS BEHIND THE GIPL PROJECT
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5
There are several steps that need to be undertaken in order to implement GIPL. Start-up is possible in 2020 at the earliest
2014 2015 2016 2017 2018 2019
Concluding the bilateral Cooperation Agreement
(including annex) for preparatory phase
Concluding the bilateral agreements, including
Connection Agreement to determine the
technical and financial aspects of the Project
implementation
Contractual obligations between
Project Promoters1
PCI Status, that facilitates permitting and
eligibility for EU funding
Route study, EIA, basic and detailed
engineering, building permission
Funding from EU - CEF
Compensations based on CBCA decision (ACER)
and Inter-TSOs agreement/s on its implementation
Own funds provided by the Project Promoters
Commercial interest in short and long term
capacity bookings
Preparatory works2
Securing sources of financing3
FID4
Project realisation5
Technical Design of the Project
Purchasing pipes and valves
Interconnection Agreement to
determine the responsibilities and
liabilities of the Parties during the
project operation
Construction
Start of operation
GAS INTERCONNECTION POLAND – LITHUANIA
STEPS THAT NEED TO BE UNDERTAKEN IN ORDER TO IMPLEMENT THE GIPL PROJECT
BEFORE 2009
► Transit oriented infrastructure (East-West
running pipelines)
► High exposure to supply disruptions
► Fragmentation – limited attractiveness for
upstream players and traders
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NATURAL GAS INFRASTRUCTURE IN CENTRAL-EASTERN EUROPE AND THE BALTICS
STEPS TAKEN AFTER 2009
► New investments commissioned – reverse
flows, new cross-border interconnections,
LNG Terminals
► The first step made towards integration
and diversification of the region
► Further steps in terms of „hardware” and
„software” still necessary to complete an
integrated, diversified and competitive
gas market in the CEE and Baltic regions
2009
Perspective 2020
2015
Investments till 2023
Before Russia – Ukraine gas crisis• Small range of high pressure pipelines • Lack of alternative sources of supply
• The high dependence on suppliers from the East
Need to change the situation Commercial operations of the LNG Terminal from 2016
Completion of the North-South Corridor• Construction of the Poland - Czech Republic II (Hat)
• Construction of the Poland - Slovakia
• Expansion of LNG terminal
Full integration with neighboring countries, access to multiple sources of gas
Gas transmission system
Gas transmission system
Gas transmission systemTechnical import capabilities Technical import capabilities
Technical import capabilities
► Implementation of the Investment Program 2009-2014 has resultedin fundamental change of the Polish security of supply situation .
► Current import capabilities form the West (including virtual reverseflow at Yamal – Europe pipeline) amounts 10,5 bcm andcorresponds to almost 90 % of the annual import requirements
► With the completion of LNG Terminal in 2015 import capability shallamount 15,5 bcm and exceed total import requirements inPoland.
► Improvement of supply situation shall be a solid basis for furtherdevelopment of gas market in Poland and shall ensure thepossibility for better integration of regional gas market
91%
9%
27%
19%
54% 38,3
11,6
East West LNG
14%
31%
22%
33%
22,6
East physical
West
physical
LNG
West virtual
DEVELOPMENT OF NATURAL GAS IMPORT CAPACITIES IN POLAND
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
PL-LT
PL-CZ
Shale gas
PL-DE
Yamal
LNG Świnoujście
PL-CZ
Baltic Pipe
Expansion of LNGŚwinoujście
PL-SK
Linking the CEE and Baltic regions
Expansion of LNG terminal in Świnoujście
Baltic Pipe
Further development of the transmission system
Development of new UGS capacities
Implementation of the North-South corridor
PL-CZ interconnection in Hat
PL-SK interconnection
PL-LT interconnection
PL- UA interconnection
Development of internal network to ensure high
level of supply reliability and improved regional
interoperability
Strengthening infrastructure in Poland
LNG terminal in Świnoujście
Enhancement of the internal grid - more than
1,000 km of new pipelines
PL-CZ interconnection in Cieszyn
Upgrade of PL-DE interconnection in Lasów
Physical reverse flow on the Yamal pipeline
Investment projects included in the national Development Plan 2014-2023 (approved by NRA).
Approx. 800 km pipes to be commissioned by 2018/19, further 1200 km by 2023.
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3,5
b
EU
R1,2
b
EU
R
GAZ-SYSTEM’S NETWORK DEVELOPMENT PLAN
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INFRASTRUCTURE – A HARDWARE FOR REGIONAL MARKET INTEGRATION
► V4 natural gas market is approx. 41 bcm/y with thepotential to growth up to about 60 bcm/y
► In total V4+UA market provides the level of approx.100 billion m3/y
► Further potential to link Baltic States and Finland(8-9 bcm) via GIPL with the European natural gasmarket
► Creating conditions for the new supply potential…(Norway, Southern Corridor, …)
► Elements influencing the market integration:
► Infrastructure (i.e. interconnectors)
► Common policy goals
► Regulation (Network Codes, GTM)
► Liberalisation (Gas Exchanges
functioning, formation of hubs, Gas releaseprogrammes)
► Competitiveness (economies of scale)
► New sources (LNG, gas from alternativedirections)
► Possibility to integrate the national gas markets intoregional marketplaces:
► BEMIP
► CEE
50
bcm
8.3
bcm
9.2
bcm
5.7
bcm
BEMIP
CEE
NCS +
Nordic
markets
potential
8-9
bcm
16.5
bcm
Full integration of the Baltic states into the EU gas
market, which cannot be achieved by
implementation of LNG Terminal only
Access to the number of gas supply opportunities
offered by developed Western European gas
markets via Poland
Enhanced security of gas supply Enhanced diversification of gas supply
sources and routes Market integration (implementation of
GTM)
Enhancement of competition Market development Price convergence with the Western Gas
Market Better utilization of existing infrastructure
assets (e.g. underground gas storages in
Latvia, LNG Terminal in Klaipeda )
Win-Win solution for the whole
Baltic Region
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GAS INTERCONNECTION PL-LT
BENEFICIAL SOLUTION FOR THE ENTIRE BALTIC REGION
VOB
CEGH
NCG
Gaspool
VTP Denmark Baltic
States
UA
VTP eustream
VTP GAZ-SYSTEM
LNG
Thank you for your attention
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