The deal is a sign of mounting international support for Lithuania, Latvia and Estonia, coming only days after the UK said it would send troops to join US and German forces in the region to shore up defences against Russia.
Energy supplies are one of the chief weak spots Moscow is able to exploit against the Baltic countries. Until recently, they were entirely dependent on Soviet-era pipelines, giving them no leverage to haggle over prices, the newspaper points out.
The 534km GIPL pipeline, which will run from Rembelszczyzna in Poland to Jauniūnai in Lithuania, is aimed at diversifying the Baltics’ energy supplies. From Lithuania, it will be possible to distribute gas from western supply routes more widely across the Baltics as the three countries push ahead with further infrastructure work.
National leaders are expected to sign the contracts on Thursday on the sidelines of an EU summit in Brussels.
Diplomats said the European Commission had identified the pipeline as a priority and would provide EUR 295 million of the total cost of EUR 558 million via its Connecting Europe Facility. Poland, Russia’s most vocal critic among larger EU nations, would provide some EUR 120 million.
The EU views the pipeline as a key element of its “energy union” – a plan to create a single market and connect the continent’s fragmented energy networks. This is expected to help prices converge and reduce dependence on imports.
Work on the pipeline will begin next year and is expected to be completed by 2019. The initial projected annual capacity of the pipeline will be 2.5 billion cubic meters, potentially rising to 4 billion. That would be sufficient to supply almost all the needs of the Baltic region.
However, the dynamics of creating a regional market in the Baltics are complicated, partly because of pricing. Lithuania has recently started importing liquefied natural gas at the Klaipėda terminal, but the fuel is expensive, the Financial Times points out.