Despite the economic impact of Covid-19, Conexus continues implementing the projects of European interest and absorption of investments
The unified natural gas transmission and storage system operator JSC “Conexus Baltic Grid” (Conexus), despite the impact of Covid-19 on the national economy, continues developing two projects of European interest the implementation whereof will have a positive effect on several industries and employ local experts in their implementation. Total investment in Inčukalns Underground Gas Storage modernization and Enhancement of Latvia-Lithuania interconnection (ELLI) projects will reach €93,5 million by 2025, during 2020 it is planned to absorb investments of €11 million.
The implementation of both projects prescribes absorbing the total investment of €93.5 million by 2025, including co-financing by the European Union. So far, 7% or 6.3 million euro of total project investment have been completed, which means that the largest investment is still to be absorbed in the coming years. In the second half of this year, Conexus plans to absorb investment of EUR 9 million, but the total investment absorbed in 2020 will reach 11 million in both projects.
One of the most ambitious projects that was commenced already last year is Inčukalns Underground Gas Storage (UGS) modernization project, which improves the technical infrastructure and the operational safety of the storage facilities, while the Enhancement of Latvia-Lithuania interconnection allows increasing the transmission capacity in both directions approximately twice to meet the demand of regional gas market.
Rinalds Dimiņš, Head of the Storage tells about Inčukalns Underground Gas Storage modernization project: “The establishment of an innovative and world-class underground gas storage will be an important step for the development of the interconnected infrastructure of natural gas in Latvia and Baltic Region, therefore, despite the current economic situation, it is essential to continue these development projects, which stimulate the recovery of the economy of Latvia. By implementing the planned sub-projects by the end of this year, we will be a step closer to the operation of modern Inčukalns Underground Gas Storage and strengthening Latvia's positions as a reliable cooperation partner in the field of energy.”
In the second half of 2020, the absorbable investments in amount of €7.7 million are needed to implement several sub-projects, including the development of a gas collection point No. 3 reconstruction project and the preparation of procurement documentation for the necessary equipment. In terms of investment, this part of project will be the largest one within the framework of Inčukalns UGS modernization project. The investments are also aimed at restoring 4 wells and providing equipment to increase the productivity of Inčukalns UGS wells. With restoring of these wells, it is planned to restore 10 of the total of 36 wells by the end of the year. In the second half of the year, it is planned to direct the investment also toward the development of a construction project of new gas transfer facility and preparation of procurement documentation to acquire the required equipment, as well as toward the development of technological project of modernization of the existing gas transfer facilities in the compressor unit No. 2 and for the manufacture of the equipment.
According to R.Dimiņš, the storage modernization project consists of three directions - modernization of surface infrastructure, gas wells and existing gas infrastructure, and part of the tasks of sub-projects are carried out by local, not foreign experts, which indicates to their high competence to carry out technically complex infrastructure modernization projects.
In general, €88 million will be invested in improvement of operation of Inčukalns UGS, €44 million of which are co-financed by the European Union, and the project will last until the end of 2025.
Enhancement of Latvia-Lithuania interconnection to complement the internal energy market
By the end of 2023, Conexus is implementing another project of common European interest or PCI - Enhancement of Latvia-Lithuania interconnection. The project aims to increase the transmission capacity in both directions approximately twice to meet the demand of the regional gas market and ensure the security of gas supply in cross-border connections, as well as to ensure sufficient capacity for natural gas flows throughout the Baltic natural gas system. By implementing this project, access is facilitated to Inčukalns UGS and Klaipeda liquefied gas terminal, as well as to the Gas Interconnection Poland-Lithuania (GIPL), which is due to be launched in 2022.
So far, several project steps have been taken - construction projects of several parts of project have been developed and construction works have been started, while it is planned to absorb the investment of 1.3 million euro in the execution of the tasks to be carried out during the second half of 2020. The investments are intended to carry out the gas pipeline diagnostic works, as well as to prevent the defects found during such diagnosis, to develop the construction projects for the remaining parts of the project and to announce several specific procurements required to purchase the equipment.
Ivars Cibuļskis, Manager of Conexus gas transmission: “Enhancement of Latvia-Lithuania interconnection is a great example of how a region can get the maximum investment return by implementing international natural gas infrastructure projects. With investments from both countries and the co-financing provided by the European Union, we are able to implement the project more effectively and quickly. One of the first stages of the project in Latvia was carried out this spring by doing the repair works near Valmiera, and I am really pleased that we were able to attract local experts in the implementation thereof. It is planned that also in the implementation of further sub-projects we will rely on the competences of local experts.
The total cost of the project is estimated at €9.77 million, of which the project costs of Conexus is set at €5.50 million, and €4.27 million for the Lithuanian natural gas transmission system operator "Amber Grid", while the co-financing of the Connecting Europe Facility is set at 50% of the total cost of the project.