Following the acquisition of interests in thefields in the Norwegian Continental Shelf and signing the agreementwith Energinet.dk concerning the construction of the Baltic Pipe, whichis to connect the Polish and Danish gas systems, the participation ofPGNiG in the Consortium developing the SKANLED pipeline is anotherimportant step on the way to securing natural gas supply fromScandinavia to Poland. This means coming back to the strategicagreement with the Danish and Norwegian partners of 2001 as an elementof the strategy for diversification of the gas supply to Poland -said Krzysztof Glogowski and Zenon Kuchciak members of the ManagementBoard of PGNiG after signing the consortium membership agreement.
The business concept currently implemented by PGNiG consists of four elements:
 Securinggas supply sources on the Norwegian Continental Shelf (NCS) both fromthe fields acquired by PGNiG and contracts for gas purchase from othergas producers on the NCS,
 Securing gas transportation from the Norwegian transmission system to Denmark through the SKANLED pipeline,
 Securing the gas transportation through the Danish transmission system through cooperation with Energinet.dk,
 Construction of the Baltic Pipe offshore pipeline in cooperation with Energinet.dk. The implementation of the above concept will leadto diversification of gas supply to Poland and will offer new businessopportunities, which will be significant in the context of the Europeangas market. In addition, it should be emphasised that the Baltic Pipecan serve as an interconnection, which are strongly advocated for bythe European Commission. The terms agreed in the process of negotiationswith the consortium members and Gassco include, among other things, thefollowing:

1. The participation of PGNiG in the SKANLED to be connected with the implementation of the Baltic Pipe project
2. Theparticipation of PGNiG in the SKANLED project to be connected withexpansion of the capacity of the Danish system - which as a result withenable gas transmission from Norway to Poland
3. Securing ofadequate transmission capacity in the Norwegian transmission system toenable gas transmission from, among others, the fields owned by PGNiGthrough the SKANLED pipeline.

With the acquisition of a stake in the Consortium,PGNiG has obtained the right to take part in decisions concerning allits matters, the right to take decisions regarding capacity booking andthe access to the entire project documentation.

Before inclusion of PGNiG, the Consortium wasformed by 7 energy companies from Norway, Denmark and Sweden, whichjointly held 70% of the stakes. Among them there is Energinet.dk, thepartner of PGNiG in the Baltic Pipe project. Two other new members whojoined the Consortium together with PGNiG are E.ON and Preem Petroleum.Currently, the Consortium operates as a joint venture.
Technical parameters of the SKANLED project

• The gas pipeline with run from the facilityin Kårstø (the only entry point), where it will be connected with theEuropipe II transmission grid
• Currently, five exit points are planned: Rafnes (Norway), Lysekil, Vallby Kile, Bua (Sweden), Jutland (Denmark)
• In addition, transportation of ethane along Kårstø - Rafnes section is planned. Financial expenditures of PGNiG in the project

PGNiG as a new member of the Consortium isobliged to participate in the costs of Phase 2, which consists infunding the project study work. The share of PGNiG matches thecontributions by each of the remaining members and amounts to approx.PLN 500 thousand.
At this point the project has entered Phase 3,which will last until October 2009, when the final decision to disbursefunds will be taken. By that time the environmental consents andbuilding permits will be obtained. The costs to be incurred by PGNiG inPhase 3 of the SKANLED project should not exceed PLN 10 million. Thisamount will be reimbursed if PGNiG withdraws from the project and theentire project enters the execution phase.
Upon completion ofPhase 3, in October 2009, the investment decision is expected. Theentry to Phase 4 will depend on the individual decision by eachConsortium member. The level of potential obligations of PGNiGresulting from the investment decision is estimated at approx. PLN 500million. Main benefits from the participation of PGNiG in the SKANLED Consortium are:

• prospects for improving the security of supply,
• elimination of gas supply disruptions,
• reduced dependency on one supply direction,
• enablingimports of a more significant gas volume (current entry points areoverloaded and the market demand for gas is growing),
• balanced sources of gas supply to Poland.