Lithuania has a chance to break away from Russia’s Gasprom monopoly byreceiving almost half of all its necessary gas from Poland.  The Polish daily Rzeczpospolita reported on 24 June that the Polish Gaz-System and Lithuanian Lietuvos Dujos (Lithuanian Gas) have already agreed the details of the letter of intent on cooperation in the construction of the pipeline between Lithuania and Poland.  The European Commission seems to be willing to fund the project.

Jan Chadam, the President of Gaz-System said to the paper that signing of the documents is already possible this summer.  ‘First of all we would need to perform a preliminary feasibility study and business analysis. We applied for funding from the European Commission’ he said to the paper.

The paper reports that the planned pipeline would initially transport to Lithuania about two billion cubic meters annually.  The gas will be transported through the Liquefied Gas terminal in Swinoujscie. This about three quarters of all gas consumed in Lithuania in last year.  Consumption of natural gas is falling.  Lithuanian consumed 2.7 billion cubic meters in 2009, 3.2 bln cubic meters in 2008 and 3.5 bln cubic meters in 2007, the National Control Commission for Prices and Energy Commission reported.

The paper reported that the Lithuanians and Poles can expect some funding to come from the European Union.  The pipeline should stretch for about 360 kilometres just on the Polish site.  President Chad said that the cost of laying the pipeline is estimated to be from 2 to 3 million of Polish zloty (from 485.000 to 728.000 Euros).  Hence the constructionon the Polish side would cost from 700 million to nearly 1.1 billion zloty (1 PLN = 0.242874 EUR on 25 June).  ‘We cannot bear such a high cost, especially having in mind that our company is responsible for other strategic projects to improve the security of gas supplies in the country’, said the head of Gaz-System.

The paper says that the real breakthrough for the project came in May,when the President of the European Union Jose Manuel Barroso, while in a conference in Vilnius, stressed the importance of the Baltic gas pipeline, and talked about possible co-financing from the EU budget.

The Baltic News Service reported that the Lithuania’s Minister of Energy Arvydas Sekmokas received reassurances from the European Commission on financing of the  Lithuania-Poland gas link.  The Minister had a telephone conversation with the European Commissioner for energy Gunter Oettinger on June 23.  Sekmokas said, “The commissioner assured us that the project is an important one and that they will secure European financing for this long-term endeavour”.

The Lithuanian government’s plans to break free from the Russian monopoly has encountered opposition from its own gas giant Lietuvos Dujos, which is one third owned by the Russian Gazprom.  However it seems that the government has found a way to persuade Lietuvos Dujos.  Only some twenty days ago Lietuvos Dujos voiced its scepticism toward the project of uniting the Lithuanian and Polish gas systems.  Lietuvos Dujos’ head Viktoras Valentukevicius said on June 3 that the pipe is a poor commercial decision and asked whether the pipe is necessary at all.  “Shareholders have agreed to lay the gas connection between Lithuania and Poland, as soon as it becomes economically justified. This is a key factor,” Valentukevicius said.