Strategic Czech-Polish Gas Interconnector Pipeline Thrown Into Doubt

Poland backed away from the signing of a deal for the construction of the Stork II Czech-Polish natural gas interconnector pipeline in June after it concluded that it could end up strengthening Gazprom‘s leverage over the Polish natural gas sector. Polish officials were concerned that the gradual implementation of the giant Nord Stream II pipeline would result in bringing Russian gas to Poland through this interconnector.  The Stork II is perceived by Polish officials as contravening the government‘‘‘s plan to terminate its long-term supply contract with Gazprom, which is due to expire in 2022.

Although the project was scheduled to be operational by 2018, the Polish project partner, Gaz-System, officially postponed its final decision by three years, without any prior consultation with the Czech partner company, Net4Gas. 

With a capacity of 5 billion cubic metres per year, the project was designed to connect the transmission systems of the two countries with gas capable of flowing in both directions.  Once completed, it would contribute to the strategic North-South corridor, permitting countries in Central Europe to source natural gas from the LNG port terminal in the Polish city of Swinoujscie (where the first LNG cargo arrived in June 2016) or from another in Croatia. 

Last year, the project also received generous funding from the EU, specifically EUR 62.7 million, which is in line with the EU‘s efforts to increase energy security across Europe.  A delay of three years, however, could endanger this financing, halting the project.  The Czech government strongly supports the project and the country‘s  Industry Minister, Jan Mladek, is expected to discuss the plan with his Polish counterpart in September. 

Interestingly, on August 12, the five Western firms which had planned to build the Russian-German pipeline, Nord Stream II, announced that they had pulled out of an agreement to join Gazprom in its Nord Stream II AG consortium, which overseas the construction and operation of the pipeline. Gazprom can be expected to press on with the project, hoping for a change in circumstances before construction is set to begin in 2018.  It is still unclear what effect this decision might have on the Stork II interconnector discussions.