Energinet expects higher Baltic Pipe costs amid delays
Danish gas transmission system operator Energinet has warned of a €135mn ($157mn) bump in construction costs at the Danish section of the Baltic Pipe project, caused in part by the suspension of work because of problems getting environmental approval.
Work on Baltic Pipe came to a halt in June after Denmark's environmental and food appeals board repealed a construction permit over concerns about the impact on protected bat and mice species. The delay, while a new environmental permit is being sought, has led to a €80mn increase in costs, Energinet said on October 4.
Energinet also blamed design changes at the pipeline's planned connection point with existing Norwegian infrastructure, as well as high demand for construction contractors. The total cost of the pipeline's Danish section is now assessed at €1.1bn, the operator said.
"We have been forced to revise the budget, due to a number of unforeseen costs, not least stemming from the consequences of the repealed environmental permit," Energinet said. "The temporary halt to construction has meant a lot of extra claims from the contractors who were already working on the onshore pipeline at the time. We also have to acknowledge that the integration of Baltic Pipe into the existing Nybro Terminal is extremely complex and costly."
Despite the cost hike, Energinet said Danish gas consumers could still look forward to a €270mn saving on tariffs thanks to the pipeline, which at full capacity will carry 10bn m3/year of Norwegian gas to Denmark and Poland.
Energinet reiterated that the pipeline was still expected to start flowing gas on October 1, 2022, three months before Poland's long-term contract for Russian gas supply expires. The government in Warsaw has repeatedly said it will not renew the contract, intending to replace Russian supplies with volumes via Baltic Pipe and via its LNG import terminals.