The Energy Market of the Baltic Region Closer to the EU

On October 15, a grant agreement on the Gas Interconnector Poland–Lithuania (GIPL) was signed in Brussels. It is the first gas pipeline which will connect the Eastern Baltic Sea region to Continental Europe. The agreement parties are the national gas transmission system operators – Poland’s GAZ-SYSTEM S.A. and Lithuania’s AB Amber Grid – as well as the Innovations & Networks Executive Agency (INEA) of the European Commission. It is the first step towards implementing the EU Baltic Energy Market Interconnection Plan (BEMIP), which aims to integrate the energy markets in the Baltic Sea region. The project has also obtained EU Project of Common Interest status because of its socio-economic benefits to the Baltic states and Finland.

At the signing ceremony, President of the European Commission, Jean-Claude Juncker, mentioned that not only will the GIPL help end the energetic isolation of the Baltic Sea region, but it will also bring there “new economic dynamism”. In its press release, the Commission has also stressed that this agreement will increase security in the European energy market and that the project implementation will be one of its priorities.

The GIPL is Lithuania’s 2nd project towards energetic independence from Gazprom after the liquefied natural gas (LNG) terminal in Klaipėda, launched on December 3, 2014. Lithuania’s President Dalia Grybauskaitė believes that the country will be integrated into the EU energy system by December 2019, the estimated date of the GIPL launch. She has also emphasized that this project will increase the competitiveness and operational flexibility of the local energy market.

Poland’s representative at the ceremony, Prime Minister Ewa Kopacz, has tweeted: “We got unprecedentedly high support from #EU funds.” In another tweet, she has also stressed that the gas pipeline will help Poland minimize the dependence on Gazprom’s gas: “Thanks to the implementation of the #GIPL we will definitely be stronger in negotiations with the dominant gas provider.”

In contrast to Lithuania, Poland’s gas suppliers are more diversified: one third of gas is extracted on its own territory, two thirds are imported from Russia, Germany and the Czech Republic. However, 80% of gas comes from Russia.

The total cost of the GIPL is EUR 558 million. It will cost EUR 422 million for Poland and EUR 136 million for Lithuania. The EU will cover over half of the costs, i.e. EUR 295,4 million. The pipeline will be 700 mm wide and 534 km long. It will connect the compressor stations in Jauniūnai, Lithuania (177 km distance to the border), and Rembelszczyzna, Poland (357 km distance to the border). Its starting capacity is the following: “from Poland to Lithuania: 2.4 billion cubic meters a year and from Lithuania to Poland: 1.0 billion cubic meters a year”.

References:  [1] European Commission, / [2] Jurgita Čepulytė, / [3] Ministry of Energy of the Republic of Lithuania, / [4] European Commission, / [5] / [6] / [7] @PremierRP / [8] @PremierRP / [9] Andrzej Kublik,