What The Pipeline Deal Means To Poland And The Baltic States

For a long time, Lithuania, Latvia and Estonia have been importing gas through the Soviet-era pipeline. They have not had a chance of negotiating prices for the gas. It is this fact that has provoked them to want to break away from the Russian pipeline. The three Baltic States will be signing a deal with Poland to build a gas pipeline that will run from Poland to Lithuania.

Poland recently opened Swinoujscie terminal where liquefied natural gas will be supplied. The country will be getting their first shipment from Qatar in December this year. The pipeline will see them break dependence on Russian gas import. Poland sees the deal as an element that will create a single market and later on see the gas prices converge.

The ambitious Lithuania has been importing liquefied natural gas through Klaipeda terminal for a while. Though the gas is expensive, they have plans underway to distribute the gas to other countries and see them rise to be the regional gas hub. The terminal gas reserve will take in about 50% of Lithuania gas consumption. They also plan to expand gas pipeline that will connect the gas reserve in Incukalns, Latvia. This expansion, however, may be hindered by the fact that Latvia’s gas market is not free. Gazprom, a Russian firm controls the market, and the contract is said to expire in later years. Estonia, on the other hand, has previously reduced its gas consumption by embracing alternative energy sources, has been purchasing the Lithuanian gas.

The proposed 534 Km pipeline will be constructed starting next year, and it has received funding from Poland and European Commission through its Connecting Europe Facility. The facility will cost €558m and will be a solid platform for the parties to have a bargaining power that currently is denied by the monopoly Russian firm.

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