Poland and Lithuania have signed the grant agreement on the first gas pipeline connecting the two countries, the European Commission announced on Thursday.

The project GIPL (Gas Interconnector Poland – Lithuania) will “end the long lasting isolation of the Baltic Sea region and bring the energy needed for a new economic dynamism to the region,” the Commission said on its website.

The 534-kilometre pipeline will integrate EU and Baltic energy markets and reduce their dependence on Russian gas.

Poland's Prime Minister Ewa Kopacz and Lithuania's President Dalia Grybauskait? signed the agreement in Brussels on Thursday in the presence of European Commission President Jean-Claude Juncker and the prime ministers of Latvia and Estonia.

Juncker commented: "Today's signature is about European solidarity[…] Today we have done much more than bringing the energy isolation of the Baltic States to an end[…] Today we have agreed on European infrastructure that will unite us, instead of dividing us."

The agreement reached by the governments of Poland, Lithuania, Latvia and Estonia will enable the promoters, Lithuania’s Amber Grid and Poland’s Gaz-System, to start construction works with the aim of completing the pipeline by the end of 2019.

The project will integrate the gas systems of the Baltic Sea region into the internal EU gas market in line with the European Commission's energy security strategy to ensure that no region in Europe remains isolated.

Once the GIPL is built, it will connect the Lithuanian, Estonian and Latvian gas network with the EU. Currently Estonia, Latvia and Lithuania totally depend on gas supplies from Russia to meet their needs, while Poland receives about 60% of its gas from Russia and Central Asia.

GIPL’s total cost is EUR 558 M which will be funded by the Baltic States and private investment alongside the Commission’s contribution made under the Connecting Europe Facility (CEF).

GIPL obtained about EUR 305 M grant co-financing for studies and works under the CEF last year.

The gas pipeline will stretch 357 km in Poland and 177 km in Lithuania. It will be capable of delivering 2.4 billion cubic meters (bcm) of gas per year from Poland to Lithuania, and 1.0 bcm per year from Lithuania to Poland.

GIPL, which is the first gas interconnector between the Eastern Baltic Sea region and Continental Europe, is one of the energy infrastructure projects benefitting from the status of Project of Common European Interest.

In addition to GIPL other projects in the eastern part of the Baltic Sea region are obtaining a status of a Project of Common Interest. These are the gas interconnector Estonia – Finland (Balticconnector) as well as the underground gas storage in Incukalns (Latvia).