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OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHWR #1440/01 1731737
ZNR UUUUU ZZH
O 221737Z JUN 07
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4620
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHKW/AMCONSUL KRAKOW PRIORITY 1751
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 WARSAW 001440 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR, EUR/NCE, EUR/ERA, S/P, EEB/ESC 
EUR FOR JGARBER, MBRYZA 
EUR/NCE FOR DKOSTELANCIK, BPUTNEY 
EUR/ERA FOR LCATIPON, DLIPPIATT 
S/P FOR GMANUEL 
EEB/ESC FOR RGARVERICK, JLEWANDOWSKI 
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS 
 
E.O. 12958: N/A 
TAGS: ENRG ETRD EINV PREL PO
SUBJECT: POLAND JOINS SKANLED CONSORTIUM SOLVING GAS PUZZLE 
 
 
WARSAW 00001440  001.2 OF 002 
 
 
¶1.  (U)  This message is sensitive but unclassified, not for 
internet distribution 
 
¶2.  (U)  Being Summary:  On June 20, Polish Oil and Gas 
Company PGNiG joined the Skanled Consortium which is 
developing the Skanled gas pipeline from Karsto, Norway to 
Sweden and Denmark.  Poland acquired a 15% stake in the 
consortium in return for agreeing to participate in the Phase 
2 feasability study.  Poland will participate in Phase 3, 
starting now, which includes obtaining environmental and 
construction permits.  Phase 4, construction, is expected to 
begin in October, 2009.  Joining Skanled is an important step 
in achieving energy security for Poland as it will enable 
Poland to transport gas in its newly acquired deposits in 
Northern Norway through Skanled to Denmark and into the 
planned Baltic pipeline between Denmark and Norway.  End 
Summary. 
 
How Skanled Fits into PGNiG's Business Plan 
------------------------------------------- 
¶3.  (U)  Krzysztof Glogowski and Zenon Kuchiak, management 
board members of PGNiG signed a consortium membership 
agreement on behalf of PGNiG on June 20, formally joining the 
Skanled gas pipeline project.  Skanled will transmit gas from 
Norway to Denmark.  PGNiG's current business plan consists of 
four goals: 
--  Securing gas supply sources on the Norwegian continental 
shelf (NCS) from the fields acquired by PGNiG and contracts 
for gas purchases from other producers on the NCS; 
--  Securing gas transportation from the Norwegian 
transmission system to Denmark through the Skanled pipeline; 
--  Securing gas transportation through the Danish 
transmission system through cooperation with Danish company 
Energinet.dk; 
--  Construction of the Baltic offshore pipeline in 
cooperation with Energinet.dk. 
PGNiG notes that implementation of its business plan will 
lead to diversification of gas supply for Poland which will 
be significant for the European gas market.  The company 
emphasizes that the Baltic pipeline can serve as an 
interconnection, which are strongly encouraged by the EC. 
 
Financial Commitments and Timeline 
---------------------------------- 
¶4.  (U)  According to PGNiG, Phase 2, which consists of a 
feasability study, has been completed.  PGNiG will match the 
contribution of the original consortium participants to join 
the group at an estimatated cost of 500,000 zloty ($175,000 - 
note: yesterday's press incorrectly stated that this cost was 
500 million zloty).  The project recently entered Phase 3, 
which includes obtaining environmental and construction 
permits.  PGNiG's estimated costs during Phase 3 are 10 
million zloty ($3.3 million).  At the end of Phase 3, in 
October 2009, the consortium will decide whether to commence 
construction.  PGNiG estimates its total cost for its 15% 
share will be approximately 500 million zloty ($175 million). 
 Both Minister of Economy Wozniak and Deputy Minister Naimski 
emphasized that Poland's participation in Skanled will depend 
upon completion of the Baltic pipeline. 
 
Special Terms 
------------- 
¶5.  (U)  In joining the consortium, PGNiG received a 
concession that its participation will be linked to 
connection of the Skanled pipeline to Poland's planned Baltic 
pipeline.  PGNiG's participation is also dependent upon the 
expansion of capacity of the Danish transmission system 
allowing addition gas to be transmitted from Norway to 
Poland.  Finally, PGNiG's participation depends upon securing 
adequate transmission capacity in the Norwegian transmission 
system to ensure access of gas from its fields in Norway to 
Skanled.  The other consortium members will purchase PGNiG's 
interest if the company decides to opt-out.  Both Minister of 
Economy Wozniak and Deputy Minister Naimski emphasized that 
Poland's continuing participation will depend upon completion 
of the Baltic pipeline. 
 
Technical Paramaters 
-------------------- 
¶6.  (U)  PGNiG states that the Skanled gas pipeline will 
 
WARSAW 00001440  002.2 OF 002 
 
 
begin in Karsto, Norway where it will be connected to the 
Europipe II transmission grid.  Under current plans, five 
exit points are planned in Rafnes, Norway, Lysekil, Vallby 
Kile, and Bua Sweden and Jutland Denmark.  The consortium 
plans to transport ethanol as well as gas along the 
Karsto-Rafnes section.  Wozniak and Naimski refused to 
comment on how much gas will eventually reach Poland, noting 
that the quantity will depend on the size of the Skanled 
pipe. 
 
Consortium Members 
------------------ 
¶7.  (U)  Prior to PGNiG's entrance into the Consortium, which 
operates as a joint venture, the group consisted of 7 energy 
companies from Norway, Denmark, and Sweden, which jointly 
held 70% of the shares.  Energinet.dk, Poland's partner in 
the Baltic pipeline, is an original member.  In addition to 
PGNiG, E.ON and Preem Petroleum recently joined the 
consortium. 
 
Comment 
------- 
¶8.  (SBU)  Joining Skanled is a major coup for Deputy 
Minister of Economy Naimski and his team as the GOP continues 
to pursue its goal of achieving energy independence from 
Russia.  PGNiG's purchase of gas fields in Northern Norway 
was questioned by some experts at first, but gave the GOP 
credibility in its negotiations with companies and 
governments.  The agreement to join Skanled gives PGNiG and 
the GOP access to a continuous transmission conduit from the 
Norwegian fields assuming Norwegian and Danish domestic 
capacity can handle the increased load.  Krzystof Rogala of 
Poland's Gas Systems told us that "now the real hard work 
starts", confirmation that the GOP recognizes that commercial 
decisions and coordination must occur to ensure Skanled's 
success and and allow the GOP to reach its ultimate goal of 
receiving gas from Norway. 
ASHE