Poland chems group calls for interconnected gas grid with Germany

10 June 2011 16:12  [Source: ICIS news]

LONDON (ICIS)--The Polish Chamber of the Chemical Industry (PIPC) is determined to push ahead with a project to interconnect the country's gas grids with Germany despite Poland's treasury ministry deciding not to recommend state financial backing for the initiative, it said on Friday.

"This is a very necessary integration. If there is no state support we will try and go ahead with finance from interested companies and strategic investors," said PIPC president Wojciech Lubiewa-Wielezynski.

"The current non-interconnected gas grid, which means gas users have no access to the European spot price market, has in the past couple of years meant Polish chemical and fertilizer companies paying up to three times as much for gas as foreign competitors. The situation must change," he added.

High gas costs that caused uncompetitive fertilizer prices were the key factor in Poland suffering its first ever negative chemical products trade balance in 2009, Lubiewa-Wielezynski noted.

PIPC has called for the Polish state to meet 50% of the cost of an interconnector that would be constructed on a route crossing the Polish/German border near Police, in the West Pomeranian province in the northwest corner of Poland. With government backing, some of this contribution could be sourced from EU funds, it said.

The chamber has drawn up three project options, costing €97.6 ($141.4m), €139m and €252.3m, respectively, aimed at ending Polish industry's dependence on Russian gas supplies obtained on the basis of long-term fixed contracts with Polish gas monopoly PGNiG.

However, the treasury ministry has declined to support any of the options, claiming that such an interconnector would simply connect Poland to the Nord Stream pipeline - due to connect Russia and Germany via a Baltic Sea route from late 2011 - and thus to more Russian gas.

"The treasury ministry supports every idea that leads to a real diversification of gas sources. Linking to Nord Stream wouldn't change the situation as this would still be Russian gas," said treasury ministry spokesman Maciej Wewior.

Poland is currently concentrating on diversifying gas supplies by investing in its first liquid natural gas (LNG) port terminal, with a processing capacity of 5bn cubic metres of gas per year, in Swinoujscie on the Baltic Sea coast, and other gas interconnectors, such as one linking to the Czech gas grid, he added.

"As soon as those investments are complete, Polish chemical companies will be able to buy gas on the spot market," added Wewior.

Lubiewa-Wielezynski pointed out that the PIPC project had the backing of the European Commission's High-level Group on The Competitiveness of The European Chemical Industry.

The origin of the gas it would provide was not a decisive factor, he said. The main appeal of this particular interconnector was that Polish chemical and other companies would gain feasible, secure access to the EU-15 spot gas market, he added.

There was also the possibility that pipeline developments ahead would eventually mean that both Russian and non-Russian gas would flow through the interconnector, Lubiewa-Wielezynski said.

($1 = €0.69)

By: Will Conroy
+44 20 8652 3214

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