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.