Polish-Lithuanian gas pipe to end Baltic energy isolation

Pipelines are a far cheaper means of transporting oil than by ship. [Maureen/Flickr]

A grant agreement to finance the first gas pipeline between Poland and Lithuania was signed today (15 October), in what European Commission President Jean-Claude Juncker said mrked the official end of the Baltic region’s energy isolation.

The leaders of Lithuania, Latvia, Estonia and Poland signed the agreement at an official ceremony today, in presence of the Commission President. Juncker said the move would increase the EU’s energy security and strengthen its resilience to potential gas supply interruptions.

“Today we have done much more than bringing the energy isolation of the Baltic States to an end. We have brought the region further together. Today we have agreed on European infrastructure that will unite us, instead of dividing us,” Juncker said.

The three Baltic countries – Lithuania, Latvia and Estonia – which were Soviet republics until the early 1990s, are still highly dependent on Russian gas supplies. The EU sees the pipeline as a key element of its “energy union”, a plan to create a single market and connect the continent’s fragmented energy networks. This is expected to help prices converge and reduce dependence on imports.

The Prime Minister of Poland, Ewa Kopacz, the President of Lithuania Dalia Grybauskaité, the Prime Minister of Latvia Laimdota Straujuma, and the Prime Minister of Estonia Taavi Rõivas are in Brussels for the EU summit which begins later today.

The 534km GIPL pipeline will run from Rembelszczyzna in Poland to Jauniunai in Lithuania. From there, it will be possible to access gas from western supply routes more widely across the Baltic as the three countries push ahead with further infrastructure work. Lithuania and Last year Poland and Lithiania asked the European Union to cover up to 75% of the costs of the pipeline.

>> Read: Lithuania, Poland ask EU to fund gas link

The Commission committed to provide €295 million of the total cost of €558 million via its Connecting Europe Facility. Poland would provide some €120 million.

Work on the pipeline will begin next year and is expected to be completed by December 2019. The initial projected annual capacity of the pipeline will be 2.5 billion cubic meters per year (bcm/y), potentially rising to 4 bcm. That would be sufficient to supply almost all the needs of the Baltic region.

However, the dynamics of creating a regional market in the Baltics are complicated, partly because of pricing. Lithuania has recently started importing liquefied natural gas at the Klaipeda terminal, but the fuel is reportedly expensive.

>> Read: Lithuania breaks Gazprom’s monopoly by signing first LNG deal

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