ENTSOG GRIP BEMIP 2014-2023 / Main Report

ENHANCEMENT OF LATVIA–LITHUANIA GAS INTERCONNECTION

The enhancement of bi-directional capacity up to 12 mcm/ day between Latvia and Lithuania could increase the opportunities for a cross-border trade, for higher usage of Latvian Inčukalns UGS and would increase security of supply and flexibility of the gas transmission systems in Latvia and Lithuania. The project is highly dependent on the implementation of other infrastructure projects in the region, and the benefits or the threats to this project are different un- der any certain scenario of gas infrastructure development in the region. In case gas interconnection with Poland is constructed and / or capacity in Klaipeda-Kiemenai pipeline is enhanced, there is almost no need of this project for security of supply reasons. However in such a case this project could successfully serve for the diversification of supply on a higher scale to Latvia and Estonia, both from European western markets or LNG market. Moreover, when gas interconnection with Poland is constructed, this project may be needed to provide an access to the Latvian Inčukalns UGS at a sufficient scale for both Lithuanian and Polish market players. If the plans of construction of regional LNG terminal in Finland and Estonia are real- ised together with Balticconector project, providing diversified supply route from the Gulf of Finland area, the need of this project for diversification purposes also be- comes questionable. Summarizing, depending on what other investment projects are implemented in the region, this project may appear to be very beneficial and important for regional gas market, or not needed at all. The costs and benefits of this project should be thoroughly assessed and FID decision on this project should be taken when the prospects of other major gas infrastructures in the region will be clear. In October 2013 the KKP project was included into the list of PCIs. In December 2013 Lithuanian Government granted the project the status of a project of national economic importance. The KKP project is aimed to establish sufficient capacity to transport natural gas from the LNG terminal in Klaipeda which will be in operation starting from the end of 2014 to the natural gas consumers in Lithuania and other Baltic countries (Latvia and Estonia), thus creating opportunities for the countries of the Baltic region to diversify the sources of gas supply, enhance the market competitiveness and the security of gas supply. The project involves construction of a 110km DN800 pipeline from the LNG termi- nal connection point near Klaipeda to Kursenai. The maximum entry capacity from LNG terminal in Klaipeda (after implementation of the KKP project) will amount to 115GWh / day which will enable transportation of additional flow through the Klaipeda–Kiemenai pipeline to other Baltic states up to a full capacity of the exist- ing gas interconnection between Lithuania and Latvia. The commissioning of the KKP project is expected by the end of 2015. The total investment will make up 64million EUR. It is expected to receive up to 50% co-funding for eligible costs from the CEF and the remaining part of project costs will be covered by the beneficiaries themselves. CAPACITY ENHANCEMENT OF KLAIPEDA–KIEMENAI PIPELINE (KKP) IN LITHUANIA

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Baltic Energy Market Interconnection Plan GRIP 2014–2023