Poland’s Gaz-System told ICIS it would survey traders in July to assess interest in expanding cross-border gas transmission capacity with Ukraine

Poland, Ukraine to assess interest in cross-border gas capacity rise

By Aura Sabadus. 28-Jun-21 10:57

LONDON (ICIS)–The Polish and Ukrainian gas transmission system operators will launch in July a non-binding market demand assessment for increased border capacity, the Polish grid operator Gaz-System confirmed to ICIS on 25 June.

Depending on the level of interest, the operators will then prepare a market demand assessment report for incremental entry/exit capacity.

“This will be an important moment for market participants and their active involvement in the future plans of the operators regarding [available capacity on the] Polish-Ukrainian border,” Gaz-System said in a statement to ICIS.

The Polish grid operator conceded that the current interconnection capacity does not make it technically feasible to transmit larger volumes of gas.

“In recent years Gaz-System, together with Ukrtransgaz, the previous TSO in Ukraine, has been engaged in building a new gas interconnection but unfortunately the decision to implement the project was put on hold, based on changing market conditions and the lack of a decision to launch a binding capacity allocation procedure,” Gaz-System added.

Last year, the Ukrainian gas grid operator GTSO and Gaz-System merged the existing two physical interconnection points into a virtual interconnection point, which helped to streamline operations and incentivised companies to ship gas into Ukraine with a view to store it in the country.

Polish and regional companies have been taking advantage of Ukraine’s vast storage capacity but cross-border activity could increase if the interconnection capacity was expanded.

Currently the firm exit capacity from Ukraine stands at 4.7billion cubic metres per year (bcm/year) while the interruptible capacity stands at 1.7bcm/year.

The capacity from Poland to Ukraine is at 5bcm/year but is offered only on an interruptible basis.

To increase the cross-border capacity, Poland would also have to carry out works on its side of the border.

The increase in cross-border capacity would be vital to both Ukraine and Poland as supply dynamics in Europe could change with the diversion of Russian gas transit flows from Ukraine in the near future.

As volumes may be rerouted via the Russian-spearheaded Nord Stream 2, Ukraine would be looking to increase offtakes from Poland, including gas imported as LNG via the Polish Swinoujscie terminal.

Conversely, Polish companies would be looking to ship more gas into Ukraine with a view to inject it into storage.

A report by leading development agency USAID found the two markets could work on joint projects to allow enhanced cross-border flows and more flexibility for traders active in both countries.

Leave a Reply

Your email address will not be published. Required fields are marked *