2010

 

The Gas Transmission Operator GAZ-SYSTEM S.A. and AB Lietuvos Dujos have signed a document specifying the principles of cooperation between the companies in conducting analytical works regarding the possibility of constructing a gas pipeline connecting Poland and Lithuania. 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 S.A., 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”. – Jan Chadam, President of the Management Board of GAZ-SYSTEM S.A, said.

 

"The Baltic States are still an energy island in the European Union. The Poland–Lithuania gas pipeline would end up this status creating new market opportunities and enhancing security of supply. Shortly after privatisation, AB Lietuvos Dujos newly 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 S.A. the best way of realization of this project.” – Joachim Hockertz, Deputy General Director - Commercial Director of AB Lietuvos Dujos told.

 

The signed document is the outcome of the application for funding for analytical work that was submitted on 30 April 2010 to the EU TEN-E programme (Trans-European Networks – Energy). The prospective funding from the European Commission amounts to 50% 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.

 

The companies have agreed that in the first stage analyses, which will provide comprehensive information on the gas market in the region, e.g.: the current and planned demand for natural gas in the region, the sources of supply, the prices on the energy market and the possibility of ensuring the security of supply also in the context of new legal regulations of the European Union concerning measures to safeguard security of natural gas supply, will be performed, The completion of this stage of works is expected in the first quarter of 2011.

 

If the results of the first stage of the works 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 Poland - Lithuania gas 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 (open season procedure).

 

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The Poland - Lithuania 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 energy interconnections 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.

 

In the frame of the BEMIP forum, the gas companies of the Baltic Sea region (Poland, Lithuania, Latvia, and Estonia) maintain a discussion in order to establish a possible framework for cooperation in the scope of defining the interconnector project providing the Baltic Sea States access to the European gas market that will be acceptable for all entities and that will take the current market conditions into consideration.

 

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AB 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, AB Lietuvos Dujos operates 1.9 thou km of gas transmission pipelines, 8.1 thou km of gas distribution pipelines, 65 gas distribution stations, 3 gas metering stations and 1 gas compressor station. The company supplies natural gas to energy, industrial and agricultural companies, small commercial customers and households. Its supply covers around 40% of total gas consumption in Lithuania. It is also transits natural gas to Kaliningrad. AB Lietuvos Dujos’ 1,787 employees serve more than 550 thou customers.

 

Every year AB Lietuvos Dujos invests on a very high level in the modernization of its infrastructure and in new projects. In 2009, investments amounted to LTL 139.8 million (2008: LTL 123.3 million; 2007: LTL 118.4 million; 2006: LTL 122.8 million).

 

The company is focused on activities that continually expand the natural gas market in Lithuania: methodically developing the country’s natural gas infrastructure, providing a stable and safe supply of gas to customers, strengthening customer and public relations, efficiently managing the company and making rational use of resources and ensuring the highest quality standards.

 

AB Lietuvos Dujos was registered as a joint-stock company in 1995. The Company was privatized in two stages. Through public tenders major international energy companies became its shareholders: in 2002, the consortium of Ruhrgas AG and E.ON Energie AG (Germany) acquired a 34% stake in AB Lietuvos Dujos (presently the stake in total of 38.9% are held by E.ON Ruhrgas International GmbH) and in 2004 – the natural gas supplier OAO Gazprom (Russia) acquired a 34% stake in the Company (presently holds 37.1% stake).

 

 

The Gas Transmission Operator GAZ-SYSTEM S.A. is a strategic, state-owned company responsible for the transmission of natural gas throughout Poland. The Company manages assets worth in excess of 5 bln PLN comprised mainly of elements of the transmission system, e.g. more than 9.7 thousand km of high pressure pipelines, 14 compressor stations, 56 nodes and 970 exit points. The Company employs 2,000 people.

 

The Company plans to build over 1,000 km of new gas transmission pipelines by 2014. All the strategic gas pipelines are already under development. The most important ones will be constructed in North - Western and Central Poland (Szczecin - Lwówek, Świnoujście - Szczecin, Szczecin – Gdańsk, Włocławek – Gdynia, Rembelszczyzna – Gustorzyn, and Gustorzyn - Odolanów).

 

The Company is also responsible for the implementation of interconnectors. Apart from the development of the gas pipelines system in Lower Silesia involving the interconnection in the Lasów region on the Poland - Germany border, GAZ-SYSTEM S.A. is constructing a gas pipeline to the Czech Republic, which will be the second interconnector between Poland and the European Union gas system. It will enable the transmission of approx. 0.5 bln cubic metres of natural gas annually. GAZ-SYSTEM S.A. is also conducting preparatory works on the offshore pipeline connecting the transmission systems of Poland and Denmark, referred to as the Baltic Pipe. Funding from the EU has been obtained for these works from the TEN-E budget.

 

A crucial and strategic project in the context of interconnections is the construction of the liquefied natural gas (LNG) terminal in Świnoujście by the Polskie LNG S.A. Company, owned by GAZ-SYSTEM S.A.