Gas_14 / Gas interconnection Poland - Ukraine

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.