Lithuania, Poland gauge market interest in gas link

The Lithuanian and Polish system operators today launched a non-binding market test for capacity on the Gas Interconnection Poland-Lithuania (GIPL), which may start with a delay.

Lithuanian system operator Amber Grid and Polish counterpart Gaz-System are testing demand for 15 gas years starting from 2022-23, and are seeking views to obtain "a better understanding of the key drivers for designing optimal conditions" for GIPL access. Expressions of interest can be submitted until 7 December, while the results will be published on 23 December.

The pipeline will have a capacity of 2.4bn m³/yr, or about 69.6GWh/d, to Lithuania from Poland, and capacity of 1.9bn m³/yr, or about 55.1GWh/d, in the opposite direction. The system operators expect it to be commissioned at the start of the 2022-23 gas year, later than the previously scheduled launch date of the start of 2022. The route will connect Lithuania, Latvia, Estonia and Finland to other EU markets.

The system operators are seeking views on applying bi-directional discounts of 25-75pc, noting that EU regulation allows discounts where a new point ends physical market isolation of one EU member state.

The firms are also seeking feedback on desired standard capacity products. Amber Grid and Gaz System plan to offer all GIPL capacity as bundled, but are seeking views on the introduction of an implicit capacity allocation model, where exchanges and brokers facilitate trading of the physical gas commodity, together with relevant transport capacity.

Implicit capacity allocation already operates in the common Baltic-Finnish market through the GET Baltic exchange and could result in increased liquidity, higher transported volumes and deeper integration between Polish and Baltic markets, the operators said. It may also provide more possibilities for LNG imports, as vessels have constraints regarding discharge periods that may not be accommodated by standard capacity products, they said. Any change to the standard tariff or capacity allocation model would be introduced no earlier than 2023.

Poland and Lithuania have each lifted LNG imports in recent years, with some procured on a spot basis (see demand, spot cargo graphs, data & downloads). But Lithuania's 2.9mn t/yr Klaipeda LNG terminal has still not been fully utilised since it started operations (see utilisation graphs).

Gaz-System is planning a second Polish terminal of at least 4.5bn m³/yr to run from the 2026-27 gas year, while it plans to expand capacity at its 3.9mn t/yr Swinoujscie facility. And there are plans for an LNG facility in Latvia that would have a regasification capacity of about 3mn t/yr.

By Paul Martin

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