Poles mull Net4Gas buy in tandem with Czech-Polish gas pipeline expansion

In line with further reducing dependence on Russia for natural gas, Poles could also bid on Czech pipeline, E15 daily reports

Gaz-System, the gas transit system operator in Poland, reportedly could make a bid for its counterpart in the Czech Republic, Net4Gas, which together already plan to build a new pipeline between the countries in a bid to further weaken Russian control over the key energy source.

Czech-Polish cooperation on building a new pipeline “would be independent of the future owner of Net4Gas” Jan Chadam of Gaz-System told the Czech daily E15; he also did not rule out that the company could buy directly into Czech pipelines. Hinting at possible broader regional plans, he said the integration of Polish, Czech and Slovak pipelines — with Gaz-System’s participation — would benefit Europe as a whole.

Gaz-System and Net4Gas are already planning a pipeline from Poland to the northern Moravian city of Ostrava that would have a transport capacity of 8 to 10 billion cubic meters (bcm) of gas — twice the capacity of the Stork pipeline now connecting the two countries — and be co-financed by the EU.

That project is in line with EU energy policy wherein the chief goal is to build an internal, integrated energy market by 2015. The free flow of gas between all EU member states will require the development of the transmission infrastructure, above all the cross-border connections of gas networks.

The planned Polish–Czech gas pipeline also constitutes a significant element of the planned North–South Gas Corridor that will connect the LNG terminal currently under construction in Świnoujście by a network of gas pipelines in Poland, the Czech Republic, Slovakia and Hungary with the Adria LNG terminal in Croatia.

It could open the way for deliveries of Qatari gas to the Czech Republic from the Polish seaside and eventually to shale gas deliveries from Poland, E15 said.

Increasing Stork’s capacity is also a possibility, E15 said, but demand, storage capacity in the Moravia-Silesia region — and not least of all the Czech strategic energy concept — will all be significant factors.

The Ukraine factor

The possible sale of Net4Gas, which is part of the German giant RWE, had been an open secret for months. But recent pronouncements by the Russian gas exporter Gazprom that it wants to avoid all gas shipments to the European Union now going through Ukraine would seriously undermine its value.

Net4Gas’ main asset is the now aging east-west stretch of pipeline running from the south-east to the north-west of the country taking natural gas to western Europe after being shipped through Slovakia and Ukraine.

Czech energy group Energetický a Průmyslový Holding (EPH) and local gas exploration, production and storage group KKCG have both said they would be interested in bidding for Net4Gas.

Gazprom itself might be a logical bidder, and its declaration might be seen as a means of cutting the price for the gas pipeline assets in the Czech Republic and also those in neighboring Slovakia, where a 49-percent stake in the country’s main gas company, SPP, is expected to be sold by a consortium of E.ON Ruhrgas and Gaz de France.