Slovak-Polish pipe advances as Gazprom calms Eustream

Source: Heren

2016/07/01

Capacity at the proposed Polish-Slovak natural gas interconnector will be sold in a binding open season in late July or early August, according to Slovak transmission system operator Eustream.

The announcement was followed by Eustream stating it had received assurances from Russian supplier Gazprom that its network will continue to be used in the long term, even if Nord Stream 2 is built.

It is unclear if the two statements are connected.

Eustream and its Polish counterpart GAZ-SYSTEM are currently in the final stages of preparing the rules for the open season, the statement read.

The pipe, which could be operational by 2021, would be capable of annually flowing 4.7 billion cubic metres (bcm) towards Slovakia and 5.7bcm into Poland. Domestic upgrades to the network in southeastern Poland would be also necessary for the 158km interconnector to function.

If the 12 million cubic metres (mcm)/day of capacity flowing from Poland to Slovakia comes online, it would open up the LNG market for Slovakia with Poland’s new Swinoujscie LNG terminal, which has a 15mcm/day regasification capacity.

The new interconnector will also grant traders active on the Polish market access to supply from the Caspian Sea.

The Polish-Slovak interconnector will form part of the North-South corridor, an EU-backed gas interconnection project that aims to increase security of supply in eastern Europe.

The Polish-Slovak pipeline, which was first conceived in 2011, is on the European Commission’s projects of common interest list, which can speed up financing and cut red tape.

Nord Stream 2

The announcement of the open season was followed by the Slovak TSO stating it had discussed with Gazprom the implication of the Nord Stream 2 being built and how that would impact flows through the central European corridor.

It said: “Eustream welcomes the assurance from Gazprom that Slovak gas transmission system as well as the Czech gas transmission system will be used in [the] long term, even if Nord Stream 2 is built.”

“Eustream also highly appreciates the understanding between both parties that the entry point from Ukraine to Slovakia shall remain fully functional even if Nord Stream 2 is commissioned,” it added.

Nord Stream 2 would flow gas from Russia directly to Germany, where it would then be transferred to EUGAL, which is another proposed pipe that would run from the Baltic Sea to the Czech Republic.

However, if Nord Stream 2 was to replace the traditional route via Ukraine, shippers would be keen to not be the last capacity holders on traditional routes as rising tariffs would force the remaining shippers to shoulder the entire transportation cost.

“One of the unspoken things is that alternative routes to Europe impose an additional cost on traditional pipelines,” Doug Wood, gas committee chairman at the European Federation of Energy Traders told ICIS.

Eustream’s comments could imply that volume delivered via Nord Stream 2 could in part be delivered onward from the Czech Republic to Slovakia and then into Poland. tom.marzec-manser@icis.com and marcello.kolax@icis.com