“The LNG in Świnoujście is crucial for the energy security in Poland and Central Europe as it brings the diversification of the natural gas supply sources and directions in the region. The European Bank for Reconstruction and Development is committed to supporting the improvement of energy security in Eastern Europe and the LNG in Poland is a major step forward in the development of Trans-European Energy Networks” - commented Riccardo Puliti, Managing Director, EBRD, charge of the energy sector, when signing the agreement.

The loan will be made available to GAZ-SYSTEM S.A. from the moment of signing of the agreement until the end of year 2014, and the amortisation period will be 12 years. Interest periods fall every 6 months, the base rate is 6M WIBOR and the margin will remain fixed for the entire term of financing. The full amount of the loan will be transferred to Polskie LNG S.A., the company being in charge of the development of the project, either as a loan or in the form of capital injection.

“The construction of the re-gasification in Świnoujście is one of the key projects being currently developed in Poland. It is another element supporting the diversification of energy sources, which will contribute to the strengthening of the country's energy security. The involvement of such prominent external institutions in the financing of this project only proves its high profile, significance and credibility” – said Mikołaj Budzanowski, the Minister of State Treasury.

“The growth of LNG importance over the recent years is worth noting – in 2010 the global share of LNG in the natural gas supply reached over 32% and is sill on an upward trend. The natural gas liquefaction technology enables the transportation of LNG from any supplier around the world, eliminates geographic barriers and creates a truly global market for gas. The LNG will be a window opening this global market for Poland. Having this in mind, we are particularly glad to have secured 100 percent of the financing already at this stage of the project. The signing of another agreement with EBRD also demonstrates that the funds allocated for this strategic development are being spent by Polskie LNG in accordance with best practice standards and most efficiently” - concluded Rafał Wardziński, Presdent of the Management Board of Polskie LNG S.A.

To finance the project worth PLN 2.7 billion, apart from the loan extended today by the European Bank for Reconstruction and Development, GAZ-SYSTEM S.A. already raised financing from the European Investment Bank in the amount of PLN 600 million. Furthermore, the subsidiary company, Polskie LNG, is a beneficiary of EU co-financing under two other programmes: European Energy Programme for Recovery (EEPR - for PLN 245 million and the Operational Programme Infrastructure and Environment – for PLN 456 million). The contribution of GAZ-SYSTEM S.A.'s own funds to the project budget will amount to over PLN 1.1 billion.

“With the EBRD funds, the financing of the LNG in Świnoujście is now fully secured. The efficient financing structure for the development not only demonstrates excellent project coordination capabilities of the company but also shows that the projects implemented by GAZ-SYSTEM S.A. fit in with the Community's policy to develop an integrated gas transmission network, enhance security of gas supply within the EU and to create a common European energy market. It is also a good indication for the market, especially the shippers who would like to build their purchasing strategies based on LNG imports - observed Jan Chadam, President of the Management Board of GAZ-SYSTEM S.A.

• Gaz-System Raised EBRD Financing For The Development Of The LNG In Świnoujście

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The European Bank for Reconstruction and Development is providing a PLN 300 million (€75 million) 12-year loan to Gaz-System SA, Poland’s national gas company, for the benefit of Polskie LNG - a company created to build the first liquefied gas terminal in Poland and in the whole of central and eastern Europe. This will also be the first re-gasification terminal in the whole of the EBRD’s region of operations. The new plant will start receiving liquefied gas from Qatar and other suppliers from around the world in 2014.

The plant in the town of Swinoujscie on the far Baltic coast will be able to re-gasify enough liquefied gas to supply a third of the country’s consumption – 5 billion cubic metres (bcm) per annum. Currently Poland consumes 15 bcm of which it imports 10 bcm, mainly from Russia, and produces the rest domestically. The LNG terminal will be connected to the national gas system by a new pipeline.

Riccardo Puliti, the EBRD’s Managing Director for Energy and Natural Resources, says: “The significance of this LNG terminal is substantial for energy security in Poland and central Europe as it means diversifying both sources and routes of energy supply. Over the past four years the EBRD has consistently worked on energy security issues in eastern Europe, as well as investing over €600 million in strategic underground gas storage and distribution in the region. Polskie LNG is a big step for the trans-European energy network”.

The EBRD has been involved in the LNG project from the very beginning, encouraging high environmental and social standards. The EBRD also strongly supports the opening up of a third of the plant’s capacity to parties other than the main Polish gas company PGNiG, which will allow new players to enter the Polish market, in line with EU requirements. The EBRD is financing 11 per cent of the project cost; other lenders to the project include the EU, the EIB and Gaz System itself.

Jan Chadam, CEO of Gaz-System, said: “By signing the loan agreement with the EBRD, Gaz-System has finalised the organisation of financing for the LNG terminal in Świnoujscie. The financing structure of this investment proves that our company fulfills the highest standards of investment coordination and that our project is in line with the European policy of development of integrated energy networks. The terminal will raise the security of supply in the European Union and will support the creation of a single European energy market. It is good news for the market, especially for the shippers, who would like to construct their purchase strategy based on the import of LNG”.

The EBRD will continue investing in other projects which will help Poland make a progressive switch from coal to much cleaner fuels for electricity generation. Currently the Bank is considering investing in the construction of a gas-fired plant in Stalowa Wola, as well as investing in renewable energy such as wind.

• EBRD Is Helping Poland Open Up To Liquefied Gas

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The purpose of the agreement is the establishment of cooperation between the partners in projects for the development of the LNG market, the development of underground gas storage and the performance of gas interconnectors within the North-South Gas Corridor, that is a priority issue for the European Union.

The operations of both Companies are part of the European Union policy for integrating the transmission system in Europe and ensuring transmission of gas through developed cross-border interconnectors.

Plinacro d.o.o. is the owner of 50% of the shares of the LNG Hrvatska project and is planning to build a terminal with re-gasification capacities of 4-6 bcm of gas annually. The investment decision concerning this will be undertaken by the Company by the end of 2013. The start-up of the Hrvatska LNG Terminal could take place in 2016-2017.
In 2011, Plinacro d.o.o., together with the Hungarian operator FGSZ Zrt, built a 294 km interconnector with a capacity of 6.5 bcm annually that will enable the transport of gas from the LNG terminal in Croatia to Hungary and to other countries in the region.

Both, GAZ-SYSTEM S.A., which is performing the development of cross-border interconnectors and is the owner of 100% of the shares in the Polskie LNG S.A. Company responsible for the construction of the LNG terminal in Poland, as well as the Croatian Company Plinacro d.o.o., are looking for new business opportunities in the scope of the optimal use of the integrated transmission system in the Central and Eastern Europe region, including re-gasification capacities of both the LNG terminals.

• Declaration For Cooperation Between Gaz-System S.A. And The Croatian Gas Transmission System Operator Plinacro D.O.O.

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In February 2012, the building permit decisions were granted for Stage 1 and Stage 3 of the Szczecin-Gdańsk gas pipeline on the Płoty-Karlino section approx. 61.95 km in length (Stage 1) and on the Koszalin-Słupsk section with the Reblino system of in/out gas locks approx. 69 km in length (Stage 3). Thus, the gas pipeline comprising of 4 stages possesses the full set of building permit decisions for Stages 2, 3 and 4. For Stage 1, the building permit for the gas pipeline section approx. 2 km in length remains to be obtained in the territory of the wind power plant in Karścino.

The Szczecin-Gdańsk gas pipeline approx. 265 km in length is located in the territory of the Western Pomeranian and Pomeranian Voivodships. Construction of the investment shall be conducted in four stages: Płoty-Karlino, Karlino-Koszalin, Koszalin-Słupsk and Słupsk-Wiczlino. GAZ-SYSTEM S.A. has also obtained the environmental approval for this gas pipeline.

The estimated value of the investment is 929.20 mln PLN, whereas the co-financing amount from the Operational Programme Infrastructure and Environment is 226.88 mln PLN. Co-financing has also been obtained from this Programme for the Gustorzyn-Odolanów gas pipeline (175.45 mln PLN), the Szczecin-Lwówek gas pipeline (159.26 mln PLN), the Włocławek-Gdynia gas pipeline (21.47 mln PLN), the Jeleniów-Dziwiszów gas pipeline (43.90 mln PLN), the Polkowice-Żary gas pipeline (25.59 mln PLN) and the Rembelszczyzna-Gustorzyn gas pipeline (121.55 mln PLN).
The planned date of completion of the investment is October 2013.

***

The Gas Transmission Operator GAZ-SYSTEM S.A. is a strategic Polish Company responsible for natural gas transmissions throughout Poland. The Company manages assets worth approx. 5 bn PLN, comprised mainly of elements of the transmission system, e.g. more than 9.7 thousand km of high pressure pipelines, 15 compressor stations, 56 hubs and 970 exit points. The Company employs over 2000 persons. GAZ-SYSTEM S.A. is also the owner of the Polskie LNG S.A. Company, which was established to construct the liquefied natural gas terminal (LNG) terminal in Świnoujście.

GAZ-SYSTEM S.A. is planning to construct approx. 1,000 km of new gas pipelines by 2014. The most important will be in north-west and central Poland (Szczecin–Lwówek, Świnoujście–Szczecin, Szczecin–Gdańsk, Rembelszczyzna–Gustorzyn and Gustorzyn-Odolanów). The development of the gas transmission network in Poland may constitute an important element of the North - South Gas Corridor connecting the LNG terminal in Świnoujście with the planned Adria LNG terminal with the aid of the transmission infrastructure of Central European countries.

In 2011, GAZ–SYSTEM S.A. completed the construction of the Włocławek–Gdynia gas pipeline, the gas compressor station in Goleniów and the gas compressor station in Jarosław. The Company has also started up the new Polish-Czech connection enabling the transmission of approx. 0,5 bcm of gas annually. GAZ-SYSTEM S.A. is also developing gas pipelines in Lower Silesia, which will enable the off-take of increased amounts of gas from the western direction. The capacity at the Lasów point on the Polish-German border currently amounts to 1.5 bcm annually (its earlier capacity amounted to 0.9 bcm annually).

Investments fulfilled by GAZ-SYSTEM S.A. in 2011 with their possibility of using virtual reverse flow services on the Yamal pipeline have created the technical possibilities to import over 3.3 bcm of gas annually to Poland from new sources (approx. 30% of the currently performed import).

• The decision on the building permit for the gas pipeline on the Szczecin-Gdańsk route

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