Poland, Lithuania speed up gas link amid Russia supply worries

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Floating storage regasification unit (FSRU) "Independence" is docked at the liquefied natural gas (LNG) terminal in Klaipeda port October 27, 2014. REUTERS/Ints Kalnins

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VILNIUS/WARSAW, Feb 28 (Reuters) - A natural gas pipeline called GIPL linking Poland and Lithuania will open on May 1, earlier than the scheduled mid-2022 start, linking the Polish grid with a route to a liquefied natural gas (LNG) terminal in Lithuania.

The earlier start was announced after Russia's invasion of Ukraine on Thursday gave rise to worries that Russian gas supplies to Europe could be cut.

Poland and Lithuania had been an discussing early start to the project for weeks amid the fears of energy supply disruption, senior government sources told Reuters.

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"During the geopolitical tensions, linking the Baltic and Finnish gas markets with the European gas market guarantees energy security and independence for the entire region," Lithuanian Energy minister Dainius Kreivys said in a statement.

GIPL will allow Poland to boost LNG imports and to ship gas to the Baltic states to smooth out any interruptions.

The pipeline, designed to have a capacity to ship about 2.4 billion cubic meters of gas per year in both directions, was financed by the European Union to help Poland and the Baltic states boost supply security.

"More gas supply sources will ensure the security and reliability of gas supply, and will open opportunities for the Klaipeda LNG terminal,” said Kreivys.

The Lithuanian LNG terminal is supplying gas to Finland since last year, when gas link to Estonia ended Russian supply monopoly.

Russia's Gazprom supplies half of Poland's 20bcm gas consumption, but the long-term contract expires at the end of this year and Warsaw doesn't plan to renew it.

The country aims to replace these supplies with shipments via Baltic Pipe, linking Poland with Norway from the autumn of 2022.

The Baltic States of Latvia, Lithuania and Estonia were once ruled from Moscow but now are part of both NATO and the EU.

Baltic officials said that Incukalns gas storage in Latvia and the LNG import facility in Lithuania give reasonable security against gas supply disruptions from Russia.

Latvia ordered additional LNG into Incukalns last week to secure the country's gas supply.

AUCTIONS IN APRIL

The first auctions will be held in April for capacity to ship the fuel available in either direction from May to September, Polish grid operator Gaz System said.

The technical capacity for transit from Poland to Lithuania will amount to 2,564,500 kilowatt-hours per hour and interruptible capacity from Lithuania to Poland at 2,419,550 kWh/h during the period, Gaz System said.

That would allow the shipment of 173 million cubic meters of fuel per month from Lithuania to Poland and, 164mcm/month in the opposite direction, according to Reuters calculations.

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Reporting by Andrius Sytas in Vilnius and Marek Strzelecki in Warsaw, editing by Terje Solsvik, William Maclean

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