Skanled postponement to impact gas supply to Scandinavia

The recent postponement of the $1.5 billion Skanled pipeline project is likely to have a direct impact on future gas supply to Scandinavia.

Offshore staff

LONDON -- The recent postponement of the $1.5 billion Skanled pipeline project is likely to have a direct impact on future gas supply to Scandinavia, but Gas Strategies Consulting warned today that the delay could have a bigger impact on other European markets.

Unless the pace of investment in certain infrastructure development projects is maintained, the company warns that investment cutbacks brought about by the global economic downturn will have a greater impact on Europe's security of supply once the recession is over.

The consequence of delaying Skanled, which was to deliver 7 bcm of gas to the Scandinavian markets of Norway, Sweden, and Denmark may be of greater concern to Poland. The Polish gas incumbent PGNiG, a shareholder in the Skanled consortium, was proposing to extend the pipeline to Poland to support its diversification strategy away from Russian gas, which currently makes up 76% of its total gas supply.

For Poland, the delay in Skanled may hasten its efforts to bring forward the construction of an LNG terminal at Świnoujście, but it will also have a wider European impact. The pipeline was one of 13 regional gas interconnector and storage projects that had been earmarked to receive European Commission funding as part of a €5 billion ($6.8 billion) stimulus package, the prime purpose of which is to offer financial support for the development of those infrastructure projects aimed at diversifying supply.

05/11/2009

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