Norway-Poland gas pipeline plan needs demand for 75% of capacity
OSLO (Reuters) — A pipeline to supply Norwegian gas to Poland that will cost an estimated $2.23 B will only be built if there is demand for at least 75% of the gas it can transport, one of the partners in the project told Reuters.
Poland, which consumes about 16 Bcm of gas per year, is keen to build the 10-billion-Bcm pipeline as it seeks to reduce its dependence on Russian gas. If it goes ahead, the pipeline would deliver first supplies in 2022.
Russia's Gazprom supplied 11 Bcm of gas to Poland in 2016, and has a supply contract that runs to 2022.
To go ahead, the new pipeline would need to receive bids for long-term contracts to supply 7.5 Bcm of gas, or 75% of the pipeline's capacity, Soeren Juel Hansen, chief consultant at Danish gas system operator Energinet, said.
On June 6, Poland and Denmark, the project's main partners, launched a so-called Open Season, which consists of two bidding phases for gas shippers in order to check market demand. Phase one closes on July 25.
Energinet would proceed with economic tests that could lead to construction agreements "if the bids are sufficient from 7.5 Bcm and more" in phase one of that process, he said, adding most bids would have to be for 15-yr contracts.
Poland's state-run PGNiG, which has indicated it would book most of the pipeline's capacity, said it would place bids in the next six weeks.
"We expect to be the key shipper in this project," Marek Woszczyk, the head of PGNiG's Norwegian subsidiary, told Reuters, adding the pipeline's transport cost were a key factor.
"The tariffs will define the business case for the shippers," Woszczyk said.
Energinet's Hansen said market participants had indicated in a 2016 study that the tariff levels on offer were attractive. He did not say at what level they would be set.
In addition to Poland, the pipeline could supply Ukraine and other nations, via Poland's onshore gas infrastructure. The estimated 2-B euro pipeline cost includes enhancing Poland's gas network.
"The current planned reinforcements of the Polish system is sufficient to allow for exports to Ukraine," Hansen said, adding Germany, Sweden and Denmark could also receive gas from the pipeline.
Discussions for the pipeline first began in 2001 and have been held on and off since then. During that period, Poland signed a supply contract with Gazprom.
"This is the first serious attempt (to build such a pipeline) in 15 yr and probably a once in a lifetime opportunity," Hansen said.
Reporting by Lefteris Karagiannopoulos; Editing by Gwladys Fouche and Edmund Blair
Indonesia, home to 260 MM people on 14,000 islands across a vast archipelago, is estimated to become the seventh-largest economy in the world by 2030, with such growth expected to boost the nation’s energy consumption by 80% from present levels.<sup>1</sup>
At October’s HPI Forecast Breakfast for our sister publication, <i>Hydrocarbon Processing</i>, I shared <i>Gas Processing</i>’s forecast on change in the LNG industry.
In one of the toughest markets in the history of gas compression, we are challenged to deliver more with less.
The New LNG Imperative
The shale gas boom established the US as the world’s leading natural gas producer and is responsible for billions of dollars of investments in the US gas processing industry. Since 2012, the US has witnessed unprecedented growth in new gas processing capacity and infrastructure. This rise is due to greater production of domestic shale gas, which is providing cheap, available feedstock to fuel the domestic gas processing, LNG and petrochemical industries. New gas processing projects include the construction of billions of cubic feet per day of new cryogenic and gas processing capacity, NGL fractionators, multi-billion-dollar pipeline infrastructure projects, and the development of millions of tons per year of new LNG export terminal construction. Attend this webcast to hear from Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing, Scott Allgood, Director-Data Services, Energy Web Atlas and Peregrine Bush, Senior Cartographic Editor, Petroleum Economist as they discuss the future of LNG and the application of Energy Web Atlas, a web-based GIS platform which allows users to track real-time information for every LNG project.
November 29, 2017 10am CST
View on Demand