News Code : 43599

Petrotahlil :Denmark on Friday gave its approval for the construction in Danish waters of the planned 10 Bcm/year Baltic Pipe, a pipeline designed to bring Norwegian gas via Denmark to Poland from October 2022.

The Danish permits were given to the operators of the project -- Danish grid operator Energinet and its Polish counterpart Gaz-System -- and were the last of the major approvals required for the project.

"The decision is an important step for Baltic Pipe," the project operator said Friday, adding that the project was moving ahead "according to plan."

While the bulk of the work on the pipeline -- which will help Poland to eliminate the need for Russian gas imports -- will be undertaken in 2020-2022, the first construction is planned for December 2019 when Energinet breaks ground on the preparations for a compressor station to be located on the southern part of the island of Zealand.

Gaz-System plans to start the site preparation works in the landfall of the pipeline in the Faxe area of Denmark in the middle of 2020.

'KEY ELEMENT'

Gaz-System CEO Tomasz Stepien said the Danish government's approval for the construction of the Baltic Pipe offshore section was a "key element" in the implementation of the project.

"It is an integrated construction permit and environmental decision for the maritime zone," Stepien said.

"Gaz-System planned a number of technological solutions minimizing the impact of the gas pipeline on the environment in the documentation," he said.

Stepien added that the process of selecting a pipe supplier and a contractor for construction works was also underway.

The Danish Energy Agency said in a statement Friday that a total of 242 km of the pipeline would pass through Danish waters out of its total 850 km route.

The application for approval of the pipeline in Danish waters was made in January this year.

"The Danish Energy Agency finds that the offshore pipeline project can be constructed and operated without unacceptable impact on the environment and safety," it said.

The approval of the permit for Baltic Pipe comes as Russia's Gazprom still awaits a similar permit allowing it to build its 55 Bcm/year Nord Stream 2 pipeline through Danish waters.

PROJECT FID

Energinet and Gaz-System took the final investment decision to proceed with the Baltic Pipe project -- the cost of which is estimated at up to Eur2.1 billion -- in November 2018.

They have said they expect completion of the project in October 2022, a date designed to coincide with the end of Poland's long-term supply contract with Gazprom.

Poland wants to eliminate the need for Russian gas imports under PGNiG's long-term, partly oil-indexed contract, arguing that the price it pays for Russian gas is too high.

As well as importing gas from Norway, Poland also has plans to expand its 5 Bcm/year LNG import terminal at Swinoujscie to 7.5 Bcm/year and to install a new floating LNG terminal in the Bay of Gdansk by 2024/2025.

Warsaw estimates Polish gas demand will rise by up to 4 Bcm/year from around 18 Bcm this year to 21-22 Bcm in 2023-24.

The new FSRU is also set to give Poland the opportunity to become a gateway for gas supplies in the region in the middle of the next decade. It will have more import capacity than it needs, meaning it can sell gas on to other countries in eastern Europe, particularly Ukraine.

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