Home » Baltic Pipe: How Poland is speeding up its exit from Russian gas | Business | Economy and finance news from a German perspective | DW

Baltic Pipe: How Poland is speeding up its exit from Russian gas | Business | Economy and finance news from a German perspective | DW

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About 100 kilometres (60 miles) east of Denmark and 75 kilometers (km) north of Germany and Poland, two pipelines meet silently at the hours of darkness depths of the Baltic Sea. One is heading from Russia to Germany, the opposite from Norway to Poland.

Russia’s newly constructed Nord Stream 2 pipeline has been mothballed amid sanctions towards Moscow over its conflict in Ukraine. Nord Stream 1 continues to be supplying fuel to Europe however flows have been throttled by Russia in retaliation towards the western boycott. Baltic Pipe , nevertheless, is on course to begin pumping fuel to Poland by October.

As metaphors go for Europe’s altering power safety priorities, this one is difficult to beat.

Business insiders extensively count on Russian exports to Europe to fall from at the moment round 200 billion cubic metres (7. 7 trillion cubic toes) to between 50 billion cubic meters (bcm) and 75 bcm by 2030.

“Everybody needs to shift away from Russian fuel, though we’ll nonetheless have to cooperate with Russia in the long run,” Torben Brabo, CEO of Energinet Fuel TSO — the Danish nationwide transmission system operator for electrical energy and fuel — informed DW.

In late April, Russia’s state-owned fuel firm Gazprom minimize Poland off from its annual fuel provide of 10 bcm — about 45% of Poland’s home demand — six months earlier than its long-term contract expires. At almost 96%, Polish fuel storage tanks are the most-filled within the EU, however Poland has lengthy stated it was going to finish the contract with Gazprom anyway.

Baltic Pipe is slated to turn into operational in October, alongside extensions to a liquefied pure fuel (LNG) import terminal in Swinoujscie, northwest Poland. “In these extreme instances this can be a very well timed challenge,” Brabo stated.

Baltic Pipe is a three way partnership between Polish agency Gaz-System and Danish agency Energinet and estimated to price between €1.6 billion and €2.1 billion ($1.9 billion and $2.5 billion). Will probably be an offshoot of the prevailing Europipe II pipeline from Stavanger in Norway to Dornum in Germany on the North Sea mattress.

It then runs east of Europipe II on the underside of the North Sea till landfall close to the western Danish city of Varde. Then it can run by way of Denmark till going again underwater within the Baltic Sea close to the island of Zealand earlier than turning south for landfall in Pogorzelice in Poland, located 60 km east of Swinoujscie, the place Poland is extending its LNG import capability.

Russian threats

Baltic Pipe comes amid mounting tensions over Russian fuel deliveries to Europe. Russian fuel big Gazprom stated final week that it was curbing provides by way of the Nord Stream 1 undersea pipeline from 167 million cubic meters per day right down to 100 million cubic meters. The corporate blamed the delayed return of kit that had been despatched to German firm Siemens for repairs.

On Tuesday, Siemens Vitality stated the delay in returning the gear to Gazprom was as a result of they had been taken to Canada for a scheduled overhaul and haven’t been returned as a result of Ottawa’s sanctions on Russia.

On Wednesday, Gazprom raised the stakes in its fuel row with Europe, saying it could additional cut back the capability of fuel provides through the Nord Stream 1 pipeline to 67 million cubic meters per day.

Robert Habeck, Germany’s financial system minister and vice-chancellor, stated the transfer was supposed to drive up costs. “It’s clearly a method to unsettle and drive up costs,” he stated, including: “We are able to at the moment purchase the mandatory portions from the market, albeit at greater costs.”

Two days later, Danish Defence Minister Morten Bodskov, informed reporters that Denmark “should settle for that the Baltic Sea is changing into a high-tension space.”

Points to be resolved

One drawback is that Poland’s state-owned monopolist, Polish Oil and Fuel Firm (PGNiG), has reportedly not been capable of contract ample quantities of fuel from Norwegian or Danish companions. It has reserved the vast majority of the Baltic Pipe capability, and is now making an attempt to finalize industrial contracts earlier than the funding is launched.

Poland’s state-owned fuel grid operator Gaz-System says the brand new pipeline’s capability has been booked as much as 80% and there’s sufficient time to get that as much as 100% earlier than demand begins climbing again up within the chilly season. Polish media stories put the determine at 50%.

By October 1 this yr, about 75% of the complete annual capability of 10 bcm ought to be prepared and 100% by January, Energinet’s Torben Brabo stated.

One other problem is that PGNiG operates a number of exploration concessions on the Norwegian continental shelf and needs to pump as much as 4 bcm of fuel as a part of the Baltic Pipe’s capability it has booked. This has raised hackles in some components of the Norwegian fuel business.

In an announcement to DW, PGNiG stated the group is “constantly and efficiently striving to extend the volumes of its personal pure fuel manufacturing in Norway.” The corporate is aiming to realize this with “acquisitions and investments within the deposits already owned.”

PGNiG has the objective of extracting 3 bcm of fuel from Norway in 2022 — 112% extra over the earlier yr — and 4 bcm in 2027. A latest funding in Norway’s Orn fuel discipline is meant to safe a further 0.25 billion cubic meters “within the coming years,” the assertion stated, as PGNiG is set to make sure the booked capability “is absolutely utilized.”

Alternate options

Albrecht Rothacher, an ex-EU diplomat from Germany, thinks it could be a lot simpler for the EU to attach Baltic Pipe with the northeastern German city of Lubmin, the place Russia’s Nord Stream 1 and a pair of arrive.

Lubmin is simply 62 km away from Poland and already the place to begin for the Opal pipeline, which hyperlinks Nord Stream 1 with onshore European fuel grids, operating from northern Germany to the Czech Republic and boasting an annual capability of 36 bcm of pure fuel. A second, smaller pipeline, NEL, additionally begins in Lubmin and already hyperlinks Germany with Dutch fuel fields.

“Each capacities are supposed to accommodate for the Nord Stream 1 and a pair of volumes,” Albrecht Rothacher informed DW.

Edited by: Uwe Hessler

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