The EU government has decided to allocate €215 million to the construction of the Baltic Pipe, a pipeline that will transport gas from Norwegian deposits through Denmark to Poland.
The Polish gas operator Gaz-System will receive the funds for construction of the pipeline. The company announced on Monday that it had signed the relevant agreement with the EU’s Innovation and Networks Executive Agency (INEA).
The financing will be used to build the underwater section of the pipe that will connect the Polish and Danish gas transit systems and to upgrade Poland’s gas transit infrastructure.
The EU budget funds should cover 13% of the project’s total cost of €1.7 billion.
The pipeline is expected to be operational by 2022, supplying Poland with 10 billion cubic meters of gas per year. Warsaw hopes that this will enable it to stop buying gas from the Russian gas monopoly Gazprom, from which it currently purchases 10-11 billion cubic meters per year. Poland’s long-term contract with Gazprom expires in 2022, and the country does not intend to extend it.
Russian gas currently meets around two thirds of Poland’s demand (15 billion cubic meters per year). The remaining third is imported through pipes from Norway and from Qatar as liquefied natural gas (LNG).
In October last year the Polish energy corporation PGNiG (Polskie Gornictwo Naftowe i Gazownictwo) announced that it would be signing a long-term gas contract with the US. Over 20 years, Poland will receive 2 million tons of LNG per year, roughly 25 tankers and the equivalent of 2.7 billion cubic meters after regasification.