Working groups have already been established in both companies to co-ordinate the necessary analysis for the proposed pipeline, which would link the Baltic states of Estonia, Latvia and Lithuania to the Polish gas supply and transmission system ensuring alternative supplies to the region, which currently relies on Russian gas.

The co-operation agreement was signed as part of an application for funding for analytical work that was submitted to the European Commission, which is expected to deliver its decision at the beginning of 2011.

The prospective funding from the European Commission amounts to 50 per cent of the total value of the analytical work. The remainder will be covered by the operators.

The companies have agreed that the first stage analyses, to be completed in the first quarter 2011, will include:

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  • The current and planned demand for natural gas in the region;
  • The sources of supply;
  • The prices on the energy market; and,
  • The possibility of ensuring the security of supply also in the context of new legal regulations of the European Union concerning measures to safeguard security of natural gas supply.

If the results of the first stage of the works are satisfactory to both companies, the next step will be the decision regarding the preparation of the feasibility study for this project including the technical, economic and environmental assumptions for the project.

The results of the feasibility study may constitute the basis for an open season to assess the demand for gas transmission via the Poland – Lithuania Gas Pipeline.