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Poland signs contract with Italy’s Saipem to lay Baltic Pipe

Italian oil and gas engineering company Saipem will lay the Baltic Pipe on the bottom of the Baltic Sea, Poland’s state-owned gas grid operator Gaz-System said on May 4.

The €2.1bn Baltic Pipe will carry gas from the Norwegian Sea – where another Polish state-controlled company PGNiG has exploration and production concessions – via Denmark to Poland, starting in 2022. The pipeline is a key gas infrastructure project Poland needs in order to reduce its dependence on Russian gas imports.

Warsaw currently has a long-term gas supply contract with Russia’s Gazprom that expires the same year the Baltic Pipe will go online. Poland keeps hinting the contract will not be renewed.

Gazprom recently lost arbitration over prices it had been charging Poland for its gas.

Warsaw has long seen its dependence on Russian gas as a liability and with the Baltic Pipe in operation in less than two years from now, it is about to have the infrastructure to reduce or even end it.

Since 2015, Poland has operated an LNG terminal in the western town of Swinoujscie, taking in gas under contracts with Qatar or the US. The terminal’s capacity is currently 5bn cubic metres (bcm) a year but it is being expanded to 7.5 bcm.

Poland also aims to build another LNG terminal in Gdansk that will handle 4 bcm of LNG, starting in 2025.

An estimated 4 bcm of domestic production can be added to imports from non-Russian sources Poland expects to secure, covering its demand for around 17 bcm of natural gas annually by 2022, of which two-thirds is currently covered by Gazprom.

The Baltic Pipe’s investors are Gaz-System and its Danish peer Energinet.

Saipem is expected to begin work in the second half of 2020 by preparing landfall work sites in Poland and Denmark and launching the pipeline’s route surveys.

“Vessels preparing the seabed for pipeline installation will mobilise in the Baltic in the first half of next year. Pipelay as such will start in the summer of 2021. The pipeline handover for operation is planned in October 2022,” Gaz-System said in a statement.

The value of the contract is PLN 280mn.