Brief project description
The main goals of the project are as follows:
(1) to increase security and stability of cross-border gas transmission between Poland and Ukraine and thus in the whole CEE region;
(2) to decrease vulnerability of Poland and Ukraine systems in case of supply disruptions from Russian side;
(3) diversification of gas sources and routes for the CEE region by enabling an access to:
• the global LNG market (via LNG terminal in Świnoujście),
• supplies from Norway through the Baltic Pipe (Norwegian Corridor),
• storage infrastructure in Poland, European gas market (gas spot markets in Germany and other Western European countries),
• existing/planned infrastructure in Southern Europe;
(5) an access to the gas storage infrastructure in Ukraine.
The Project will support integration of the Ukraine and EU gas infrastructure through creation of a competitive gas market. Contribution to economic growth of the region and main benefits are as follows:
(1) a large scale direct investment in infrastructure;
(2) enhancing the economic activity of natural gas trading and consequently decreasing the price of natural gas;
(3) protecting industry from the adverse economic effects of a potential supply shortage or forced fuel switching;
(4) providing a basis for new developments in the region;
(5) providing social benefits in the region through preventing supply cuts for protected residential consumers and important industrial undertakings;
(6) creating job opportunities through direct employment and indirect vacancies;
Realization of the project will significantly increase the level of the diversification of gas supplies for Ukraine (access to the new sources of natural gas, including the LNG as well as the gas from Norway); level of integration of regional gas markets and establishing a transmission corridor, which will support integration of the regional gas market and enhancement of energy solidarity among EU and Energy Community countries. Bi-directional flow as well as a new corridor connecting EU to the Ukrainian gas infrastructure can considerably promote liquidity and stability of the EU market.
The Poland- Ukraine Project is also a part of the overall EU concept of the North-South Gas Corridor aiming at integration of the gas transmission systems in the CEE region. The integration of Polish and Ukrainian transmission systems within the North-South Gas Corridor will enable direct flows from the LNG Terminal in Świnoujście through the CEE countries via cross-border interconnections. The Gas Interconnection Poland- Ukraine is also important to enable the gas transmission from the planned Norwegian Corridor (Baltic Pipe) through the Polish national gas transmission system towards the Eastern Europe. The project might increase the integration with Moldova and Romania, hence highly contributing to the creation of a strong and safe regional market. Thus, the main objective of the Project is to establish a flexible transmission infrastructure within the whole CEE region, which will allow for connecting northern and western gas markets as well as the global LNG market with the CEE market. Such a scale effect should positively influence the competition and attractiveness of the region for market participants. In the long-term prospect, the Corridor should provide the construction of the unified market of gas in the region and enhance the energy security. Integration of the regional gas markets (securing access to the EU gas market) will, lead to the formation of effective competition mechanisms that would improve the efficiency of business performance to the benefit of natural gas consumers and should ensure an adequate level of wholesale gas prices. These developments may in turn contribute to creation of the East European gas hub for the CEE countries. Moreover, the project will have a positive influence on sustainable development. As a result of its implementation the economies in the region will be able to use additional gas volumes. Additional gas volumes will enable fuel switch. This action will significantly contribute to CO2 emission reduction and increase of the primary fuel usage efficiency. Especially due to gas fired plants features like higher process efficiency and lower CO2 emission in comparison to coal fired plant.
Summary: Connection of the CEE markets with the Ukrainian gas market through interconnection with Poland and creation of one common, fully operational market may be essential for the development and supply independence of the whole Region. The market potential of the CEE Region will grow significantly thanks to the fully interconnected gas markets and will create a possibility of gas flows between the countries. Having in mind the arguments provided above, it can be stated that the implementation of the Poland- Ukraine project is highly beneficial from the perspective of market integration, security of supply and competition.
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Basic project data
Descriptions |
Poland |
Ukraine |
Project promoter company/Organization full name |
Operator Gazociągów Przesyłowych GAZ-SYSTEM S.A
|
Joint Stock Company Ukrtransgaz |
Shareholders of the project promoter company
|
100% State |
100% NJSC Naftagaz of Ukraine |
Project name
|
Gas interconnection Poland - Ukraine
|
Gas interconnection Poland - Ukraine |
Project PECI or PMI
|
PMI |
PMI |
Project Code on the current (2018) PECI/PMI list
|
GAS_14 |
GAS_14 |
Project Name on the current (2018) PECI/PMI list
|
Gas interconnection Poland - Ukraine |
Gas interconnection Poland - Ukraine |
Project Code on the current (2017) EU PCI list |
No |
No |
Project Name on the current (2017) EU PCI list |
|
|
Project final investment decision status |
Non-FID |
Non-FID |
Project Name in the ENTSO(G/E) TYNDP 2018 Submission |
TRA-N-621 Polish section |
TRA-N-561 Ukrainian section |
Project Code in the ENTSO(G/E) TYNDP 2018 Submission |
|
|
Project Name in National NDP /Infrastructure Plan |
Gas Interconnection Poland-Ukraine |
Poland-Ukraine interconnector |
Project Code in National NDP /Infrastructure Plan |
n/a
|
|
National NDP / Infrastructure plan publication year |
2018 |
2018 |
National NDP/infrastructure plan publication website |
The National Ten-Year Transmission System Development Plan for 2018-2027 |
|
Project website according to Article 9(7) of Regulation (EU) 347/2013 |
Gas Interconnection Poland – Ukraine-page of GAZ-SYSTEM S.A's website |
|
Name/website of the designated competent authority in the country |
Ministry of Energy |
Responsible Authority in Ukraine for the PECI/PMI projects, and Law about PECI/PMI projects in accordance with Regulation 347/2013 has not been yet approved. |
Address of the designated competent authority in the country |
Krucza 36/Wspólna 6, 00-522 Warsaw
|
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Project details - technical information
Start point in country (Town/Interconnection Point)
|
Poland section |
Strachocina, Poland |
Ukraine section |
PL/UA boarder
|
End point in country (Town/Interconnection Point) |
Poland section |
PL/UA boarder |
Ukraine section
|
Bilche Volytsya, Ukraine |
Pipeline capacity at border point |
Poland |
Ukraine |
X --> Exit (GWh/d) |
153
|
215 |
X<-- Entry (GWh/d) |
153 |
215
|
Compressor station location and capacity (MW) |
Poland |
Ukraine |
Name of the compressor station |
Strachocina compressor station |
|
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Project Annual Report Article 5(4)
Project evolution since 2013 |
Poland |
Ukraine |
Evolution driver description |
Investment on Time
|
Investment on Time |
Explanation |
|
|
Mitigation measures to ensure project schedule |
|
|
Project implementation actions conducted since 2016 |
Poland |
Ukraine |
Project development |
In July 2016 GAZ-SYSTEM S.A. obtained all corporate approvals for the design phase and launched the engineering works phase, which includes basic and detailed engineering works, EIA, obtaining environmental localization decisions up to building permission. The works include also preparation of the detailed design. On 6th December 2016 GAZ-SYSTEM S.A. and PJSC "UKRTRANSGAZ" signed the Agreement on Rules of Cooperation for the implementation of the Gas Interconnection Poland – Ukraine. Agreement regulates the cooperation of both Operators during the engineering phase and – depending on the investment decision – during future implementation phase. The Agreement provides also the possibility to conduct the Open Season procedure, which aims at commercial and business justification of the expansion of the national gas transmission system, and primarily confirmation of the actual interest in the market. The overall development of the Polish part of the Gas Interconnection Poland-Ukraine is on track, and until now no major risks have been identified. The engineering works have been started. For the Polish part of the Project the Environmental Decision (EIA) was obtained in February 2017. Localisation Decision was obtained in July 2018. At present GAZ-SYSTEM proceeds with the Building Permit for the Hermanowice – Border PL/UA pipeline.
The engineering works have been also commenced by the UKRTRANSGAZ. In November 2016, Lviv Regional Council adopted a decision on assistance of local governments, executive and state bodies of JSC "Ukrtransgaz" during the implementation of the project "Construction of the main gas pipeline "Drozdovychi-Bilche-Volytsia". JSC "Ukrtransgaz" has developed the design estimate documentation "Construction of the gas pipeline interconnector "Drozdovychi-Bilche-Volytsia" (hereinafter DED) at the stages of Project and Working documentation. In May, 2017, the state examination was conducted (stage P) and the positive conclusion was received by the SС “Ukrderzhbudekspertyza” and approved by the order of the JSC “Ukrtransgaz” No. 398 dated 20.06.2017. The total length of the gas pipeline is 98.8 km and runs in 5 districts of the Lviv region (Stryi, Mykolayiv, Drohobych, Staryi Sambor, Sambir).
In August 2017, JSC Ukrtransgaz concluded the agreement with responsible company about land allocation.
The Gas Interconnection Poland-Ukraine is also included in the GAZ-SYSTEM S.A. and JSC Ukrtransgaz TYNDPs 2018-2027.
Non-binding market screening of demand on capacity on Ukrainian-Polish border has been conducted from 06.04.2018 to 08.06.2018. Results of assessment have shown following considerable interest on capacity:
- 3.9 bcm/y for direction Poland-Ukraine
- 1.6 bcm/y for direction Ukraine-Poland |
Permit Granting |
Ongoing, building permit expected in 1Q2019 |
In May 2017, JSC Ukrtransgaz got positive conclusion from Ukrderzhbudekspertyza (Ukrainian authority in building and construction sphere) that the project correspond to all requirements. After that land allocation procedure was started.
As of February 2019 JSC Ukrtransgaz concluded 742 of 2600 for private land plots servitude. For 195 land plots agreement with responsible authorities was reached.
|
Consultation procedures |
Ongoing |
JSC Ukrtransgaz and GAZ-SYSTEM S.A. conducted non-binding market screening of demand on capacity on Ukrainian-Polish border from 06.04.2018 to 08.06.2018. |
Construction |
Planned |
Planned |
Commissioning |
n/a |
n/a |
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Project Implementation Plan Article 5(1)
Project Pre-feasibility Assessment |
Poland |
Ukraine |
Start: 2014 |
End: 2015 |
Start: 2015, December |
End: 2016, February |
Details - Explanation |
Since 2014 GAZ-SYSTEM and UKRTRANSGAZ have been working jointly in terms of identification of the new potential scope of development of the PL - UA cross border Capacity. On 17 December 2014 GAZ-SYSTEM S.A. and PJSC “UKRTRANSGAZ” signed a cooperation agreement to establish the principles of cooperation in the preparation and analyzes of the investments required for the development of cross-border transmission capacity between Poland and Ukraine. On the basis of the said Agreemet bot TSO's have started works on preparation of the Feasibility Study for the Project. |
Percentage Done (%) |
100% |
100% |
Feasibility Assessment, ESIA/EIA and Design Studies |
Poland |
Ukraine |
Start: 2015 |
End: 2018 |
Start: 2016, March |
End: 2016, November |
Details - Explanation |
In 2015 both TSO's have completed the feasibility study for the gas interconnection Poland - Ukraine. In July 2016 GAZ-SYSTEM S.A. has obtained all corporate approvals for the design phase and has started the engineering works in Poland. Preparatory works for the gas interconnection Poland - Ukraine including basic and detailed engineering, EIA, environmental decision, localization decision up to building permission obtainment. The Environmental Decision (EIA) was obtained in February 2017. Localisation Decision was obtained in July 2018. At present GAZ-SYSTEM proceeds with the Building Permit for the Hermanowice – Border PL/UA pipeline. |
JSC UKRTRANSGAZ and GAZ-SYSTEM completed the joint feasibility study for the gas interconnection Poland - Ukraine in 2015. Moreover in 2015, separate feasibility study was completed for Ukrainian part of the project, which is necessary for obtaining permissions and environmental assessment. |
Percentage Done (%) |
90% |
100% |
FEED/Main Design |
Poland |
Ukraine |
Start: 2016 |
End: 2019, March |
Start: 2016, December |
End: 2019, February |
Details - Explanation |
In June 2016 GAZ-SYSTEM S.A. has started the engineering works for the gas interconnection Poland - Ukraine including basic and detailed engineering, EIA, environmental decision, localization decision up to building permission obtainment. The works include also preparation of the detailed design. |
The procedure was finished |
Percentage Done (%) |
90% |
100% |
Market Survey - Open Season/Capacity Auction |
Poland |
Ukraine |
Start: 2018, April |
End: 2018, June |
Start: 2018, April |
End: 2018, June |
Details - Explanation |
The non-binding market screening for capacities between Ukraine and Poland has been conducted by the Polish and Ukrainian natural gas Transmission System Operators, GAZ-SYSTEM and Ukrtransgaz.
Both TSOs have observed substantial interest from the market participants in transmission capacities in both directions. The following potential interest have been observed:
• approximately 3.9 bcm/year in PL -> UA direction
• approximately 1.6 bcm/year in UA -> PL direction, on a long-term basis, excluding the flows resulting from the existing transit contract.
|
JSC Ukrtransgaz and GAZ-SYSTEM S.A. conducted non-binding market screening of demand on capacity on Ukrainian-Polish border from 06.04.2018 to08.06.2018. Results of assessment have shown following considerable interest on capacity:
- 3.9 bcm for direction Poland-Ukraine
- 1.6 bcm for direction Ukraine-Poland |
Percentage Done (%) |
50% |
50% |
Permitting |
Poland |
Ukraine |
Start: 2016 |
End: 2019, March |
Start: 2016, December |
End: 2020, February |
Details - Explanation |
Ongoing, part of the engeenering phase. The Environmental Decision (EIA) was obtained in February 2017. Localisation Decision was obtained in July 2018. At present GAZ-SYSTEM proceeds with the Building Permit for the Hermanowice – Border PL/UA pipeline. |
In May 2017, JSC Ukrtransgaz got positive conclusion from Ukrderzhbudekspertyza (Ukrainian authority in building and construction sphere) that the project correspond to all requirements. After that land allocation procedure was started.
In August 2017, JSC Ukrtransgaz have concluded the agreement with responsible company about land allocation.
As of February 2019 JSC Ukrtransgaz concluded 742 of 2600 for private land plots servitude. For 195 land plots agreement with responsible authorities was reached.
After finishing land plots allocation process we will have to receive permission for removal of the fertile soil layer, this process сan take about 3 months.
Currently environmental assessment procedure was started and according to our expectance, this process takes not less than one year (procedure is independent from land plots allocation).
After finishing all procedures we will get final permission from State Architectural and Construction Inspection of Ukraine for construction of gas pipeline, this process will take 3 months.
Deviation:
According to feasibility study, we planned to get all permissions until December 2017 (i.a. land plot allocation procedure). Ukrainian legislation does not determine deadline for land plot allocation procedure and this process usually takes several years.
|
Percentage Done (%) |
90% |
30% |
Regulatory/Authority Approval of the project |
Poland |
Ukraine |
2018 |
2016-2018 |
Details - Explanation |
The Gas Interconnection Poland-Ukraine is included in the GAZ-SYSTEM S.A. "Ten Years Network Development Plan" for satisfying the current and future transmission demand for 2018-2027. |
The project was approved by NERC (Ukrainian national energy regulator) as part of TYNDP 2018-2027. |
Final Investment Decision taken |
Poland |
Ukraine |
2019 |
2019 |
Details - Explanation |
The dialogue between the TSOs of both countries is ongoing in order to establish grounds for taking the positive FID for implementation of the PL-UA interconnection. |
Currently, FID about this project was not taken, and we expect this decision during 2019. If FID will be taken earlier, the project implementation will take less time. |
Tendering |
Poland |
Ukraine |
Start: 2019 |
End: 2020 |
Start: 2020 |
End: 2020 |
Details - Explanation |
The dialogue between the TSOs of both countries is ongoing in order to establish grounds for taking the positive FID for implementation of the PL-UA interconnection. Therefore launching of the construction works is postponed until the FID is taken. The Project will be implemented in the following stages:
- Signing of contract for the purchase of pipes and other equipment
- Delivery of pipes and other equipment
- Selection of contractor(s) for the execution of works
- Award of contract to the contractor(s) for the execution of works
- Construction of the pipeline, including: topsoil stripping, line-pipe stringing, pipe bending and welding, trench digging, pipes lowering, backfilling, reinstatement and landscaping
It will be managed and supervised by the GAZ-SYSTEM S.A. it will be carried out with the assistance of contractor(s).
|
As FID was not taken yet, exact time of tendering procedure are unknown. If FID prescribes project implementation at own expense, the tendering procedure will take about 3 months. If FID prescribes credit by EIB, the tendering procedure will take about 9 month. EIB expressed their interest in financing of the project.
|
Percentage Done (%) |
0% |
0% |
Construction |
Poland |
Ukraine |
Start: 2020 |
End: 2022 |
Start: 2020 |
End: 2022 |
Details - Explanation |
The dialogue between the TSOs of both countries is ongoing in order to establish grounds for taking the positive FID for implementation of the PL-UA interconnection. Therefore launching of the construction works is postponed until the FID is taken. The Project will be implemented in the following stages:
- Signing of contract for the purchase of pipes and other equipment
- Delivery of pipes and other equipment
- Selection of contractor(s) for the execution of works
- Award of contract to the contractor(s) for the execution of works
- Construction of the pipeline, including: topsoil stripping, line-pipe stringing, pipe bending and welding, trench digging, pipes lowering, backfilling, reinstatement and landscaping
|
The works will start after obtaining all necessary permissions.
Realization of the project (about 730– 890 days):
1. delivery of pipeline, packaged parts, valves;
2. obtaining a work permit;
3. performance of construction and installation works:
3.1. construction of PIG trap station;
3.2. construction of gas metering station;
3.3. construction of the linear part of the pipeline (this work is parallel with work under points 3.1-3.2) |
Commissioning |
Poland |
Ukraine |
2022 |
2022 |
Details - Explanation |
Commissioning of the pipeline:
- Completion of the Technical Approval protocol of the pipeline
- Completion of the tests and start-up (gassing-up) of the pipeline
- Obtainment of the decision on granting a permit to use
- Pipeline put into operation |
After completion of construction works the project infrastructure and facilities shall obtain operation certificate (confirming acceptance of the object in operation). Period for obtaining the certificate is about 30 days. Moreover, commercial operation of the pipeline may be started after finishing of all pre-commissioning activities, which may take several months. |
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Project CAPEX and financing information
CAPEX Information |
Poland |
Ukraine |
Project CAPEX - total (mEUR) |
not available |
not available |
2020 |
|
|
2021
|
|
|
2022
|
|
|
Project CAPEX SUM
|
not available |
not available |
Project CAPEX certainty (+/-%)
|
10% |
5% |
Has the project CAPEX estimate changed since PECI/PMI submission |
Project cost is under recalculation. Results of recalculation will be available soon. |
Project cost is under recalculation. Results of recalculation will be available soon. |
Financing Information |
Poland |
Ukraine |
Applied for IFI Financing (yes/no) |
no
|
no
|
Granted (yes/no) |
no |
no |
Which institution and in what is the amount (mEUR)
|
|
|
When |
|
|
Applied for Grants from IPA/NIF (yes/no) |
no |
no |
Granted (yes/no) |
no |
no |
When |
|
|
What is the amount (mEUR) |
|
|
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Additional project information
International Cooperation - International Agreement(s) signed |
Poland |
Ukraine |
When |
2016, December |
2016, December |
Signatories of the Agreement |
GAZ-SYSTEM S.A. and Ukrtransgaz |
GAZ-SYSTEM S.A. and Ukrtransgaz
|
Short description |
Agreement on the Rules of Cooperation covers the co-operation of both Operators in the area of engeniring and construction works. |
Foreseen Regulatory Regime - Third Party Access |
Poland |
Ukraine |
Regulated Third Party Access |
n/a |
n/a |
Negotiated Third Party Access |
n/a |
n/a |
Exempted from Third Party Access capacity and duration (% of total and MW) |
n/a |
n/a |
Foreseen Tariff Regime |
n/a |
n/a |
Barriers to Project Implementation |
Poland |
Ukraine |
Regulatory Framework |
no |
no |
Permit Granting |
no |
no |
Financing |
no |
no. Source of financing is not determined and will be provided in FID |
Political |
no |
no |
Market |
no |
no |
Which incentives would support the realization of the project |
|
|
Final remarks, other |
|
|