Polish, Danish grid firms give final nod to pipeline link to Norway gas fields

WARSAW/OSLO (Reuters) - The Polish and Danish gas grid operators have taken a final investment decision to build a gas pipeline linking Poland to Norwegian fields via Danish territory and the Baltic Sea, Poland’s state-owned Gaz-System said on Friday.

FILE PHOTO: Pressure gauges are seen at a shale gas fracking facility belonging to Poland's PGNiG near the village of Rybakowo, May 21, 2013. REUTERS/Peter Andrews/File Photo

The 900-km (560-mile) pipeline, known as the Baltic Pipe, aims to reduce Poland’s reliance on Russian gas. The Baltic Pipe is expected to be ready in 2022 when Poland’s long-term deal with Russian gas company Gazprom expires.

“Construction of the section under the Baltic Sea will start in Spring 2020,” Piotr Naimski, the Polish government official responsible for power and gas infrastructure, told a news conference to announce the decision by the state company.

He said environment and other permits from the authorities were still required before construction could start.

The pipeline’s capacity will be 10 billion cubic meters (bcm) a year, with almost all of it booked by Polish state-run gas firm PGNiG. The company plans to produce 2.5 bcm a year of gas from holdings in Norwegian deposits.

Polish Energy Minister Krzysztof Tchorzewski told the news conference that Baltic Pipe was part of the North-South Gas Corridor a project to link Poland to a liquefied natural gas (LNG) terminal in Croatia, via the Czech Republic, Slovakia and Hungary.

The Baltic Pipe, costing about 1.6 billion to 2.1 billion euros ($1.8 billion to $2.4 billion), will run from the north of Poland through Swedish waters in the Baltic Sea and Danish territory where it would be linked to a North Sea pipeline.

Sten Arve Eide from Gassco, Norway’s gas system operator, said the new link to Denmark would offer “one more exit point available for gas deliveries.”

“Gassco will deliver the gas in accordance with the gas owners nominations. This will not affect the total gas exports from Norway,” he said.

Norway meets about a quarter of Europe’s natural gas needs and is the second largest supplier after Russia. Most of its deliveries are via a network of offshore pipelines to Britain, Germany, France and Belgium.

In 2015, Poland opened its first LNG terminal on the Baltic Sea as part of its efforts to diversify its sources of supply. Poland aims to expand the facility.

Reporting by Agnieszka Barteczko in Warsaw and Lefteris Karagiannopoulos in Oslo; Editing by Adrian Croft and Edmund Blair