Gas network advances

VILNIUS - Polish gas transmission operator Gaz-System and Lithuania-based gas company Lietuvos Dujos have signed a document marking the principles of cooperation between the companies in conducting analytical work regarding the possibility of constructing a gas pipeline connecting Poland and Lithuania, reports news agency LETA. Working groups have been established in both companies that are responsible for cooperation in the scope of performing the necessary analyses.

“The considered Poland-Lithuania gas pipeline can be in the future an important interconnection integrating the natural gas transmission systems in this part of Europe. The project complies with the European Union strategy to create cross-border connections, thus increasing the energy security of the Baltic States. Gaz-System, as the national gas transmission system operator, is actively following and participating in the initiatives undertaken by the European Union focused on the development of the gas infrastructure in our part of Europe,” said, Gaz-System’s president of the management board, Jan Chadam.

“The Baltic States are still an energy island in the European Union. The Poland-Lithuania gas pipeline would end this status, creating new market opportunities and enhancing security of supply. Shortly after privatization, Lietuvos Dujos created cross-border interconnection capacity with neighboring Latvia. Currently, this interconnection capacity is under enhancement. The inner-Baltic integration lays the foundation for the connection with mainland EU. The gas interconnection with Poland is strategically important for the integrity of European Union gas market and we will make all endeavors to investigate together with Gaz-System the best way of realization of this project,” said the deputy general director, commercial director of Lietuvos Dujos, Joachim Hockertz.

The signed document is the outcome of the application for funding for analytical work that was submitted on April 30, 2010, to the EU TEN-E program (Trans-European Networks - Energy). The prospective funding from the European Commission amounts to 50 percent of the total value of the analytical work, the remainder will be covered by the operators themselves. The decision of the European Commission on this matter is expected at the beginning of 2011.

If the results of the first stage of the work are satisfactory to both companies, the next step will be the decision regarding the preparation of the feasibility study for this project including the technical, economic and environmental assumptions for the pipeline. The results of the feasibility study may constitute the basis for preparing the open procedure for all market participants to assess the demand for gas transmission via the Poland-Lithuania gas pipeline.

This interconnection may constitute one of the elements of the idea to integrate the energy markets of countries located in the Baltic Sea region by creating an energy interconnection network, referred to as the Baltic Energy Market Interconnection Plan (BEMIP). The BEMIP is one of the priorities of the energy infrastructure development set by the European Union in the Second Strategic Energy Review (SER2) and is focused on the integration of the energy and gas markets in the Baltic Sea region, as well as ending the isolation of the Baltic countries from the European energy market.

Lietuvos Dujos’ core activities are importing and selling natural gas to customers, providing transmission and distribution services, and developing a well-balanced infrastructure to deliver natural gas. In all, Lietuvos Dujos operates 1,900 kilometers of gas transmission pipelines, 8,100 kilometers of gas distribution pipelines, 65 gas distribution stations, three gas metering stations and one gas compressor station.

The company supplies natural gas to energy, industrial and agricultural companies, small commercial customers and households. Its supply covers around 40 percent of total gas consumption in Lithuania. It is also transits natural gas to Kaliningrad. Lietuvos Dujos’ 1,787 employees serve more than 550,000 customers.