Poland and the Baltic States are taking another step towards independence from Russian energies. The GIPL (Gas Interconnection Poland-Lithuania) pipeline has just been commissioned on Thursday, May 5, a few days after it was commissioned. With a length of 508 km, of which 165 km in Lithuania and 343 km in Poland, it will eventually be able to transport about two billion cubic meters of gas in both directions. It is expected to be at full capacity in October. Thanks to the existing gas networks, it will even be able to connect Latvia, Estonia and Finland.
The decision to build this infrastructure is unrelated to the war in Ukraine since the start of construction in 2020. Nevertheless, it comes at the right time for these countries that want to stop importing Russian energy. The Baltic countries have also stopped importing Russian gas from the beginning of April, with the three states relying on their current underground gas reserves.
“Today we contribute our energy independence”, welcomed Lithuanian President Gitanas Nauseda at an official ceremony hosted in jauniūnai, near Vilnius, where high officials from Poland and the Baltic States gathered. And to insist: “We are strengthening our resistance to political pressure. †
Polish President Andrzej Duda said: “This interconnector is a response to blackmail” energy that Moscow exerts on Europe. As a reminder, on April 27, Russian gas giant Gazprom suspended all its gas deliveries to Poland and Bulgaria, threatening a shortage in Central and Eastern Europe, as well as the entire European continent.
Another step towards independence with Russian energy
The GIPL gas pipeline, the cost of which was about EUR 500 million, financed largely by the European Union, is one of Poland’s alternative gas sources and should cover 10% of the country’s annual demand. The Polish government, which uses up to 21 billion m3 of gas per year, has declared itself: “ready to face even the total cut” Russian natural gas. Poland’s energy supply is indeed secured, the executive said, without the need for gas reserves and without interrupting access to consumers.
As early as March, Warsaw announced that it wanted to break out of its economic dependence on Russia. Polish Prime Minister Mateusz Morawiecki listed a series of so-called measures “anti-Putin shield” according to him intended to “defusing the Polish and European economy”, as well as curbing inflation, protecting employment and – already – resisting the “gas blackmail” from Moscow.
The Polish state plans to invest three billion zloty (636 million euros) in the state-owned company Gaz-System, which not only builds and operates the gas pipelines, but also the liquefied natural gas (LNG) terminal from the port of Swinoujscie, in the west of the country.
This terminal was completed in 2016 and in 2020 the capacity was increased by 50% in 2020 to 7.5 billion cubic meters per year. To give an order of magnitude, so far the Polish gas company received about 9 billion cubic meters of gas per year, or 45% of national needs – Poland’s total annual gas consumption is about 20 billion cubic meters.
In particular, Gaz-System is building the Baltic Pipe gas pipeline that should bring Norwegian gas to Poland before the end of the year and further reduce the country’s dependence on Russian gas.
On the Baltic side, the opening of the gas pipeline for Lithuania represents a second source of gas supply, independent of Moscow, as the country has had a liquefied natural gas (LNG) terminal since 2014. According to Eurostat, in 2020 Russia accounted for 93% of Estonian natural gas imports, 100% of Latvian imports and 41.8% of Lithuanian imports.
Europe bets on LNG
Since Russia’s invasion of Ukraine in late February, Europe has sought to massively ramp up its imports of LNG, which has the advantage of being able to be shipped from anywhere in the world by ship, in order to reduce its dependence on Russian gas, which is mainly arrives via a gas pipeline.
“The LNG market is growing rapidly and recent price increases indicate a structural imbalance between supply and demand,” declared this Thursday 5 May the president of the International Group of Liquefied Natural Gas Importers (GIIGNL), the professional association of the sector, Jean Abiteboul.
Importing LNG requires building heavy terminals, or at the very least buying floating storage and regasification units (FSRU) for imported LNG. Announcements for the purchase or rental of such units have multiplied in recent weeks, and every country wants to have this type of structure as soon as possible.
But finding a floating unit can prove complicated as they are rare and demand is very high. Shipbuilding could be considered, but the shipyards producing this type of unit are mainly located in Asia and their order books are already full for years to come.