More Delays Hit Polish Import Plans

Possible delays completing the Baltic Pipe from Norway will force Poland's PGNIG to take another look at its gas import portfolio after 2022, when a long-term deal with Gazprom expires (WGI Mar.10'21). Determined to wean itself off Russian gas, the state-owned Polish firm has also lined up US LNG, as well as piped gas from Denmark. But these projects are behind schedule, too, which may leave PGNIG having to pay up for spot LNG or piped gas from its neighbors until the contracts kick in. The 10 billion cubic meter per year (970 million cubic foot per day) Baltic Pipeline will ship equity output from PGNIG fields in the Norwegian North Sea. It will run via Denmark, where grid operator Energinet said last week that construction of the 210 kilometer (130 mile) Danish section will have to halt temporarily after the Danish Environmental and Foods Appeals Board ruled that a 2019 environmental permit should be revoked. The board said Baltic Pipe had not gone into sufficient details on the measures it was taking to protect bats, Nordic birch mice and dormice, all of which are protected by the European Habitats Directive. Energinet owns the pipe alongside Polish operator Gaz-System. A spokesman says the company is still assessing the impact of the ruling and is in close contact with the Danish Environmental Protections Agency. The agency's Niels Bjorkbom tells Energy Intelligence that it will take up to eight months to approve a new permit as another environmental impact assessment will be required for the Danish section, although the process can be appealed. It's unclear if this will affect the pipe's planned October 2022 start-up. Energinet said in March that the Danish onshore section was supposed to be finished this year, so the project might be able to open on schedule, even with the delay. In addition to the Danish leg, the pipe includes a 110 km offshore section in the Norwegian North Sea connecting the key Europipe II infrastructure to Denmark, a 275 km offshore Baltic Sea line between Denmark and Poland, and a 280 km onshore pipe in Poland. Gaz-System says work on the Polish on- and offshore sections is on schedule. Poland should be able to cope with any delays. The country is expected to expand capacity at its sole LNG terminal in Swinoujscie from 5 Bcm/yr to 8.3 Bcm/yr by 2023 (WGI Jun.3'20). It should also have new pipeline connections with its neighbors. The Gas Interconnector Poland-Lithuania is expected to start up next year with 1.9 Bcm/yr of import capacity, as is the 5.75 Bcm/yr Poland-Slovakia line. Currently minimal imports from the Czech Republic and Germany could rise as these have historically been constrained by the take-or-pay clauses in PGNIG's contract with Gazprom, Warsaw-based energy analyst Wojciech Jakobik says. Baltic Pipe is initially expected to ship 1.5 Bcm/yr of Norwegian gas. PGNIG has 58 exploration concessions off Norway after buying Ineos Energy’s Norwegian assets for $615 million in March. The company now says its Norwegian output could hit as much as 4 Bcm/yr by 2027, almost double forecasts before the Ineos deal. PGNIG’s trading arm also expects to use Baltic Pipe to ship an undisclosed volume of gas under a sales and purchase agreement with Aker BP. The other delays are beyond PGNIG's control. In the US, it signed a deal in 2018 to import 2 million tons per year of LNG from Sempra's proposed Port Arthur project in Texas. But Sempra has pushed back a final investment decision on the 11 million ton/yr plant to next year. Piped imports under a deal with Denmark’s Orsted for a total of 6.4 Bcm of Danish North Sea gas from 2023-28 -- or roughly 1.1 Bcm/yr -- will also start later than planned. This is because of delays redeveloping the Tyra field. Orsted has said the contract takes account of these. Jaime Concha, Copenhagen