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06.10.2011

THE EUROPEAN COMMISSION ALLOCATED ANOTHER NON-REFUNDABLE GRANT TO THE CONSTRUCTION OF THE LNG TERMINAL

Today, the European Commission gave the green light for spending of up to 925 million PLN from the Infrastructure and Environment Operational Programme (IaEOP) for the implementation of building of a re-gasification terminal in Swinoujście. The Commission’s decision is the final step to sign a project financing agreement by Polskie LNG. The non-refundable funds obtained in this way will enable to reduce the costs of the LNG terminal construction. As a result, they will also affect to lower the re-gasification services tariff, and thus - imported gas.

The LNG terminal in Świnoujście – an investment made by a special purposed company Polskie LNG – are the tanks and systems for future storage and re-gasification of about 1/3 of Polish demand for natural gas.

The investment fits perfectly in the European strategy of energy security development, which is reflected in many important documents of the Community (energy policy, SEER and others). It also meets the objectives of the so-called X Priority Axis of the Infrastructure and Environment Operational Programme. The announced decision ends an administrative procedure initiated on August 4, 2011. On this day, the Office of Competition and Consumer Protection (OCCP) asked the European Commission to recognise the public support for the project of the LNG terminal in Świnoujście as legitimate, that is compatible with the internal market and the Community legislation,

- Today, at less that 1000 days separating us for the start of the LNG terminal in Świnoujście, I am sure of not only the beginning date of this facility operation, but also that it will be a really economical investment. – says Zbigniew Rapciak, President of Polskie LNG – the non-fundable funds are nothing other than savings for the State budget, citizens and also the future customers of gas from Świnoujście – emphasizes president Rapciak.  

The construction of the LNG terminal, which is the most important Polish investment, aims to ensure the energy security for Poland. According to the initial assumptions as from 2006, this investment was to be entirely financed from the State budget in the amount of over 4 billion PLN. Today announcement means that the total amount of grants obtained so far will constitute appr. 45% of costs of the terminal worth 2.8 billion PLN.

- This is an example of a perfect co-operation between business with administration that has been crowned with today success – adds Piotr Mika, Director of the Financial Department at Polskie LNG. – It is an undeniable merit of the Ministry of Regional Development, Ministry of Economy, Ministry of Treasury, the Oil and Gas Institute, the Office of Competition and Consumer Protection, as well as the financial department of our company – indicates director Mika.

The funds obtained in this manner are non-refundable. In November 2010, the project already received a non-refundable grant of 55 million EURO from the European Union from the European Energy Programme for Recovery. The contribution of the following EU support for this investment means a lower cost of the project for the company. And for the consumers - a lower price of gas, which results from lower costs included in the re-gasification tariff approved by the Energy Regulatory Office.

The Institute of Oil and Gas is an authority formally participating in the funds transfer to Polish LNG SA. The agreement between the Oil and Gas Institute and the company will be concluded immediately after the transfer of documents from the European Commission, and a part of those funds will be paid later this year.

The purpose of the Infrastructure and Environment Programme is to improve the investment attractiveness of Poland and its regions through the development of technical infrastructure while protecting and improving the environment, health, preserving the cultural identity and developing the territorial cohesion. The program, according to the National Strategic Reference Frameworks (NSRF), approved by the European Commission, is one of the operational programmes that are an essential tool to achieve the included objectives with the use of funds of the Cohesion Fund and the European Regional Development Fund. The Infrastructure and Environment Operational Programme is also an important instrument for the implementation of the renewed Lisbon strategy and spending on the EU priorities constitute within the Programme 66.23% of the total expenditure from the EU funds.

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The construction of the LNG terminal is considered by the Polish government as a strategic enterprise for the country’s energy security, as it will allow Poland to off-take natural gas from almost every direction in the world. The terminal will be constructed in Swinoujscie on the area dedicated for the development of the Swinoujscie port. The terminal will allow Poland to off-take up to 5 billion cubic meters of natural gas annually with the possible expansion up to 7.5 billion cubic meters (currently Poland consumes about 14 billion cubic meters of gas annually). The construction of the LNG terminal in Swinoujscie is one of its kind not only in Poland, but in this part of Europe. The construction of the LNG terminal in Swinoujscie is to be completed by 30th June 2014.

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