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What goes on in Poland on the 21st of May.
Raś: Poland and Lithuania may compete in the energy and LNG market in the future
Cooperation between Poland and Lithuania in the electricity and gas sector has signs of cooperation, like synchronization, but ultimately both countries can compete with each other. As regards LNG trading, Lithuania is looking at the northern market in the Baltic – said Kinga Raś, an analyst dealing with Eastern Europe at the Polish Institute of International Affairs during the 5th International Congress of Lithuanians in Wroclaw.
During the debate, she assessed that energy cooperation between Poland and Lithuania was progressing through the past 3-4 years, but this is the result of external conditions and the progressive integration of electricity markets. – Poland and Lithuania face the challenge of climate and energy policy, like the winter package – she said. She added that the role of Russia as an integrator of Polish-Lithuanian cooperation should not be overestimated, because its actions had an impact on cooperation between Poland and Lithuania, but they were not such as decisive factor as general European integration in the energy sector.
Raś added that the first period of operation of the floating LNG terminal in Lithuania was marked by high costs. The situation has changed in favor of Lithuanians and they already have a plan to buy the gas terminal due to changes on the LNG market (price drop – ed.) and on the Baltic market itself. – Lithuania wants to create a gas hub. Last year, the regasification unit in Klaipeda was also put into operation. However, whether Lithuania will be the hub, will depend on the price prospects of the LNG and the situation around the Baltic Sea. In 2015, LNG prices forecasts were significantly different from those from which they are currently. Will Lithuania manage to enter the Baltic and Finnish markets? The first contracts have already been signed. There is also an agreement on the construction of a connection between Estonia and Finland – Balticonnector. There are many variables on which Lithuanian plans depend. Lithuania, wanting to play the role of a gas hub, thinks about the northern direction in the Baltic Sea. Latvians, due to the power of Gazprom in this country, may not be willing to effectively cooperate in the gas sector with Lithuania – she said. She added that the LNG terminal in Lithuania has a capacity of approximately 4 billion cubic meters. That’s about 80 percent of the total gas demand in the Baltic countries. Lithuania also has plans to export gas to Poland. The principle of “first come, first served” may be applied here.
Speaking of the synchronization of the Baltic countries with Europe, Kinga Raś reminded that on May 15 this year, the Lithuanian government adopted a package of documents regarding synchronization. – Negotiations between the countries concerned were not easy, however. The process of achieving synchronization has led through numerous conversations, consultations and decisions at the EU level. According to EU reports, synchronization through Poland is the most economical. Currently, the Baltic states are integrated with the power industry with Russia under the BRELL system. The fact that networks are managed by Russia is a threat to Lithuania in terms of security of supply or cyber security. The EU agreed with these fears. The synchronization will take place through one LitPol Link 1 line and through a Harmony Link sea cable. The entire cost is about EUR 1.5 billion. 75 percent of the investment’s value is funded by the EU – she reminded.
She added that Lithuania will derive the largest profits from the energy transit from Sweden, which is to reach Poland afterwards. Warsaw was not open to the construction of LitPol Link 2, the second land connection between the two countries. It was about setting the route and importing cheap energy from Lithuania, and Vilnius has the greatest opportunities from among the Baltic countries to earn from energy re-export.
– Poland is at the stage of switching off 200 MW energy units. There is a risk of switching off on the north-eastern section of Poland. Our country wants to rely on its own resources, not to import cheaper energy from Lithuania. These interests of both countries do not harmonize with each other. An element of competition appears here. Lithuania imports about 95 percent of energy, but renewable energy is to help to address energy dependence, and in 2050 Lithuania is to be self-sufficient – said Kinga Raś.
