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UPDATE 1-New Polish gas link highlights EU drive to ensure supplies
April 1, 2014 / 2:26 PM / 3 years ago

UPDATE 1-New Polish gas link highlights EU drive to ensure supplies

WARSAW, April 1 (Reuters) - Poland opened its first gas link from the West on Tuesday as part of a European Union drive to ensure greater supply security that has taken on new urgency after Russia annexed Crimea and reignited fears about deliveries to Europe.

Building new links and upgrading infrastructure to enable flows eastward gained renewed focus in the EU following a contract dispute between Moscow and Kiev in 2009 that stopped gas flows via Ukraine to much of central and southeastern Europe in the middle of winter.

Russia's seizure of Crimea and the escalating crisis with Ukraine has increased pressure on the West to find ways to wean off the supplies from state-controlled Gazprom that meet about one third of European demand.

Moscow also announced on Tuesday a more than 40 percent increase in the price Ukraine must pay for gas, stepping up economic pressure on Kiev in its political standoff with Moscow and underlining the potential threat to European deliveries.

"The anticipated gas discount cancellations in April will increase tensions and raise gas shutoff risks by May," said Eurasia Group in a research note on Monday.

The reverse flow link along the Yamal pipeline through a pumping station in the German town of Mallnow is Poland's first gas link from the West and aimed at loosening the former Soviet-bloc nation's dependence on Russia.

Expanding the station at Mallnow allows for reverse flow capacity of up to 2.3 billion cubic metres annually with the potential to rise to 5.5 bcm in case of supply disruptions, Gaz-System said.

"(The) gas transmission operator is starting the provision of reverse transmission services on a permanent basis on the Yamal gas pipeline," the gas operator said in a statement.

"Investment in the connection of the Polish section of the Yamal pipeline and the transmission system belonging to the German operator has fundamental importance for improving the transmission capacities between Poland and Germany."

Central and eastern European countries including the Czech Republic, Slovakia, Hungary and Austria have all made recent strides to build new gas links with each other and to improve reverse flows.

So far, Gazprom has maintained supplies to Europe during the latest Ukraine crisis.

The more than 4,000-kilometre Yamal pipeline carries supplies from Russian gas fields in western Siberia through Belarus and Poland and onto Germany. (Reporting by Christian Lowe, writing by Michael Kahn, editing by David Evans and Henning Gloystein)

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