PGNiG, which earlier this month bought licenses to drill for natural gas and oil in Norway, plans to build a gas pipeline linking the fields with Poland by 2010. The company is in talks with Statoil ASA the manager of Norway's Norway's sub-sea gas pipelines, on the project, Economy minister Piotr Wozniak said at a news conference in Warsaw today. The government has no projection on the cost of building the pipelines, Wozniak said. PGNiG may abandon the project if the company determines it to be unprofitable, he added.
Our view: We are not really excited about the pipeline plans and consider it as a risk fact since again, as it was with LNG construction plans, the costs and returns on this project are very unclear. Our rough estimation on the costs of the pipeline range between EUR 1-2bn, which, could be more than perceptible for company’s budget. Since we do not calculate with additional CAPEX on this project, the decision to build the pipeline might prompt us to adjust the earnings estimates.