Czech gas system operator mulls Italian connection

Plans drawn up to connect Czech gas works with the projected transalpine pipeline, with the aim of further diversifying supplies

The TGL consortium says the pipeline could be completed by 2017 foto: © Tauern Gas Česká pozice

The TGL consortium says the pipeline could be completed by 2017

Gas transmission system operators (TSOs) in Austria, Bavaria, Slovenia and the Czech Republic are mapping customer interest in a potential pipeline that would deliver compressed gas from sea ports in Italy to the CEE region over the Alps. The project is in the initial phase while several other pipeline routes to interconnect the Czech gas network with the one in neighboring Austrian are still being considered.  

“Currently, a non-binding market survey to map the interest of gas traders in a new shipping capacity is being conducted,” Net4Gas The wider 5GL project with extensions from Upper Austria, to Slovenia and the Czech Rep. is estimated at €2 bln.spokesman Milan Řepka told the daily Lidové noviny. The project named 5GL stems from the planned 290-kilometer Tauern gas pipeline, which, if built, will run from Malborghetto in Italy, through the Carinthia region in Austria, to Haiming in Bavaria, Germany.

A study of the Tauern pipeline route completed in 2009 concluded that the project, which would cross alpine terrain, was technically feasible. The price tag is estimated at around €1.2 billion, whereas the wider 5GL project, with extensions from Upper Austria, to Slovenia and the Czech Republic, is estimated at €2 billion (around Kč 48 billion).     

The market study is due to be completed by mid October with the results to be published as of November 10. If the Tauern project goes ahead, planners say it could be completed in 2017.

Other potential Austrian connections

The 5GL project isn’t the only route being considered by Net4Gas to link up with the Austrian gas transmission system: another potential route under consideration is a 60-kilometer pipeline from from Lanžhot near Břeclav in southern Moravia, to the natural gas station in Baumgarten gas station to the east of Vienna, one of Europe’s largest gas hubs.

For the time being at least, Net4Gas is not revealing which of the two potential routes, the 5GL or Lanžot Baumgarten pipline  – also known as the LBL — it would prioritize: “At the present time, it’s not possible to predict anything about this matter. First the market study results must be published, which will then be evaluated by the participating subjects,” Řepka of Net4Gas said.

At the same time, E.ON is also considering building a pipeline from České Budějovice in southern Bohemia, via Dolní Dvořiště to connect with the West-Austria Pipeline just south of the Czech-Austrian border. Česká Energie (CE Group) is also planning a similar interconnection with the West-Austria Pipeline (WAG), with a projected 100-kilometer route named Mozart.   

Czech Gas Union (ČPU) president Oldřich Petržilka told Czech Position that the three potential routes to connect the Czech transmission system with WAG (i.e., LBL, Mozart, and České Budějovice), would basically have the same strategic significance though “of course a direct route from Baumgarten would be simpler.”

“In any case, all these projects are extremely costly, and further studies of market demand are required,” Petržilka said, adding that he doesn’t expect any decisions soon. Gas experts agree it is very unlikely that more than one of these three potential routes will be built.

Gas consumption set to rise

In 2010, the Czech Republic consumed a little under 8.98 billion cubic meters (BCM) of gas, almost 10 percent more than in 2009. The It is likely RWE, E.ON and CE Group will wait to see the impact of Nord Stream before making further decisions on building a pipeline to connect with WAG.ČPU says the increase was spurned by the upturn in industry, which is the largest consumer of gas in the country accounting for 36 percent, and by a cold winter, which boosted consumption by households.

The Ministry of Industry and Trade (MPO) predicts gas consumption in the Czech Republic will rise to over 12 BCM a year in 2020, largely due to plans to build several gas-fired power plants. Nevertheless, with the launch of operation of the Nord Stream pipeline, which runs from Russia to Germany, scheduled for November, and the prospect of either or both the South Stream and Nabucco pipelines being completed between 2017 and 2010, it remains unclear which import routes will be most efficient for wholesale gas suppliers in the Czech Republic. As such it is likely that RWE, E.ON and CE Group will wait to see the impact of Nord Stream before making further decisions on building a pipeline to connect with WAG.

Russian gas from Nord Stream will be shipped to the Czech Republic via the OPAL and recently completed Gazela pipeline.

Supply diversity - a political priority

Despite the emergence of new routes for gas imports to the CEE region and the Czech Republic with the imminent opening of Nord Stream and an expected route from the Caspian via Turkey, the TGL and wider 5GL project is considered as strategically important to the EU policy to reduce dependence on imports of gas from Russia as it would enable imports to the CEE region of compressed and liquid gas shipped to Italy by sea, predominantly from North Africa.

The TGL consortium is comprised of five Austrian gas distribution and retailers which together hold a majority stake in the project, while German gas major E.ON Ruhrgas which holds a 48.05 percent stake.