Work to continue on Czech-Polish gas interconnector despite doubts

The Stork II interconnector. [Commission]

The Czech and Polish Prime Ministers have agreed to continue a gas interconnection project between their two countries, despite continued doubts about implementation.

Prague and Warsaw said they will carry on with the Stork II project, intended to strengthen gas interconnection between the two countries.

A co-financing proposal under the EU’s Connecting Europe Facility will now be resubmitted to obtain the necessary funds, EURACTIV understands.

The interconnector should be operational by 2020, according to a memorandum signed by Czech Prime Minister Bohuslav Sobotka and his Polish counterpart Beata Szydło during the Visegrad 4 summit in Polish Krynica two weeks ago.

Stork II is designed as part of the so-called North-South gas interconnection which should contribute to the development of natural gas markets in central and eastern Europe, bringing increased security of supplies and diversifying supply routes.

The construction of the pipeline has also had a long-term support of the EU. In 2013, and 2016 again, it has been included among EU Projects of Common Interests (PCI) which are considered important for energy security of the entire Union.

Originally, the completion of Stork II was planned for 2019. However, at the beginning of June, Czech government received information indicating that the Polish counterpart wanted to impose a three-year moratorium on the project.

Sources of said at that time the hesitation was due to Polish concerns about the extension of Nord Stream pipeline intended to double the capacity of gas brought from Russia to Germany, and the planned construction of the subsequent Eugal pipeline from Germany to the Czech Republic.

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The ‘Visegrad Four’ countries (Poland, Czech Republic, Slovakia and Hungary) found a powerful ally at the EU summit which ended today (18 December) in the person of Council President Donald Tusk, who repeated most of their arguments against the Germany-favoured project.

In case these projects were implemented, the interconnection with Poland would open another route for the Russian gas to Polish territory. This inflow of cheap gas to central Europe could take away the space for projects that Poland bets on.

Warsaw is striving to build access to three different sources of gas. In June, the LNG terminal in Świnoujście was put into operation. By the end of 2020, Poland would also like to have a new pipeline bringing gas from Norway. Apart from the energy security, this should also contribute to the market development and strengthen the position of Poland in the region.

LNG terminal set to redraw Poland's energy map

Poland took a decisive step yesterday (20 November) towards building a liquefied natural gas (LNG) terminal on its Baltic coast, a project that could significantly reduce Central and Eastern Europe's reliance on Russian imports.

Political support

In response to this seeming Polish cold feet, the Czech government started intensive diplomatic negotiations in June, and both sides agreed that further steps will be decided on in September. The memorandum signed in Krynica gives the message that both sides still back the project.

“It brings an end to speculations about problems in our cooperation,” Polish State Secretary for European Affairs Konrad Szymański was quoted by portal

For the operators of transmission systems (TSOs) in the Czech Republic (Net4Gas) and Poland (Gaz-System) the memorandum means they should prepare further steps for the pipeline implementation.

“We appreciate that the situation for the Stork II project implementation seems to be more clear at the moment with the political support expressed in the memorandum,” EURACTIV was told by Michael Kehr, the Head of Strategy at Net4Gas.

According to Kehr, political support is necessary for a project of such scope and extent. Stork II should serve to ensure future energy security and integration of the Central European gas market with expected positive effects on competition.

But presently there is rather low interest from the market for those capacities and therefore it would be difficult for the TSOs to finance the project without regulatory support, which still remains an open issue.

New grant application

However, a new implementation date also means that the project must apply again for EU co-financing, which has been already promised since last September.

The European Commission decided to allocate a grant of €63 million for the project. The sum should have been granted from the Connecting Europe Facility (CEF) which supports construction of key transport, energy and digital networks in the EU.

The Commission understands that the Czech and Polish TSOs will now jointly re-submit their funding proposal under the currently opened grant call, EURACTIV was told by spokeswoman Nicole Bockstaller.

The call closes on November 8, 2016. After that, Commission should prepare a list of proposals recommended for funding, which must be approved by a committee composed of member states’ representatives. Successful applicants will then negotiate with the Commission on individual grant agreements.

The Commission spokeswoman did not comment on whether Stork II will have problems with re-allocating money due to previous doubts.

During the summer, concerns also appeared that the available funds will be used by other projects because of delays.

“No award agreement was signed and no money disbursed. In other words, the money is still in the CEF budget. But as already mentioned, we understand that it is the project promoter’s intension to re-submit its CEF funding proposal during the currently open call,” Bockstaller said.

“We are considering the new application for EU funding in cooperation with Gaz-System and we will see the outcome,” Net4Gas’ Kehr said.

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