The European Commission on 16 October approved €465 million and €134 million in project financing “for natural gas pipelines and modernisation works” in Poland and Greece respectively.
“Last Wednesday, the European Commission decided that both projects, Poland’s GAZ-System and Greece’s DESFA comply with EU state aid rules,” Maria Madrid, a spokeswoman for Competition Commissioner Joaquin Almunia, told New Europe on 18 October. The Commission has concluded that the projects will further EU energy goals without unduly distorting competition in the internal market.
In March, Poland notified plans to support the development of the Polish gas transmission network to the Commission. The aid, which is financed by EU Structural Funds, will be granted to GAZ-System, the State-owned gas transmission system operator in Poland.
GAZ-System will build a network of new pipelines that will help setting up a North-South Corridor of gas supply in Poland. The corridor is a network of infrastructure intended to facilitate the access to gas supply sources in the North (i.e. Norwegian gas and the LNG terminal in Swinoujscie) and to better integrate the Polish gas market with the gas markets in Germany, the Czech Republic and Slovakia.
As the pipelines will have a higher transmission capacity, it will be possible to give network access to a greater number of gas suppliers, in line with the principle of Third Party Access defined in EU internal market rules, the Commission said. This will stimulate competition in the gas supply market, it added.
“The broad aim of creating energy independence and of reliable supply is one of the factors that affect our investment,” Shirin Wheeler, spokesperson for Regional Policy, told New Europe on 18 October.
Earlier in October, Polish state-controlled PGNiG said in a statement it would kick off talks with Gazprom on the Yamal-Europe pipeline. However, Poland, which currently still imports close to 70% of gas, most of it from Gazprom, looks to diversify its gas supplies and get a discount from the Russian gas giant.
A European Commission source told New Europe “the aim of the North South corridor is to reduce dependency on Russian gas”.
Meanwhile, the EU and the Greek state are financing four projects of Greece’s DESFA, the majority stake of which is about to be sold to Azerbaijan’s state oil company SOCAR, aimed at improving and expanding the Mediterranean country’s gas network. These projects aim at increasing the gas transmission capacity and security of gas supply within Greece and indirectly at reducing CO2 emissions.
“The aid will help Greece to expand and strengthen its gas network. This will improve competition between gas suppliers and will benefit consumers, also by diversifying energy sources,” Almunia said in a statement.
DESFA, Greece’s only gas transmission operator, is obliged to ensure that third party access is available to its network for all suppliers of gas. DESFA plans to increase the storage capacity of a liquefied natural gas (LNG) terminal in Revithoussa and install a natural gas compressor station in Nea Messimvria. Moreover, the new high pressure gas pipelines will allow for diversification of energy sources in areas that did not have access to gas before (Aliveri and Ag Theodoroi-Megalopoli).
The Commission said that these projects help to develop the gas market in Greece by enabling DESFA to offer extra gas transmission capacity. In addition, the projects have indirect environmental benefits resulting from the possibility of using a less polluting fuel in areas that so far relied on heavy fuel oils in energy production, the Commission added.
Wheeler told New Europe that there are a variety of different objectives when Cohesion Policy funds energy projects. “The issue of energy dependency and supply is one of the key guiding aims in the investment. But for us there are other issues like environmental and general growth issues for Greece that make us do these investments,” she said.
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