Brussels plans boost for CEE energy infrastructure

By bne IntelliNews October 15, 2013

Tim Gosling in Prague -

The European Commission released a list of priority energy infrastructure projects on October 14. The major thrust behind the list is the aim to relieve Central and Eastern European states of their dependence on Russian gas, and includes a nod towards a third guise of the abandoned Nabucco gas pipeline.

The first EU list of projects of common interest includes a total of 248 schemes of regional importance. While many are set within a single country, they all serve to build up potential for inter-linking EU states, which offers greater supply diversity. The publication of the list comes as Brussels is pushing against Russian pressure to prevent the likes of Ukraine and Moldova signing pacts with the EU next month. Moscow's wields its dominance of gas supply to those country's as a major stick, and any disruption to flows could hit the wider CEE region.

EU common interest projects will see accelerated planning and permit procedures, with a strict three-and-a-half-year term applied. They also qualify to apply for funds from a special EU fund that should put €5.85bn on the table over the next six years.

"In the gas sector, one priority is the security of supply," EU Commissioner for Energy Gunther Oettinger told a press conference. "Our aim is that EU member states such as Lithuania and Poland, Romania and Bulgaria gain access to at least two alternative sources of gas supply. We seek the integration of these countries into the EU, and they should not be dependent on the gas supply exceptionally from Russia."

Among the projects on the list are 20 liquified natural gas (LNG) terminals and gas transportation systems connecting EU countries, mainly in CEE. However, no project that carries Russian imports makes the grade, and only three gas pipeline import routes are offered support. They include a pipeline linking Algeria to Italy and a route connecting Cyprus to Greece. The final project will form another link in the so-called "southern energy corridor" by connecting Turkmenistan to Azerbaijan.

That is a nod towards yet another bid to salvage what was once the grand EU-backed Nabucco pipeline scheme. Originally planned to carry over 60bn cubic metres of gas from the Caspian into the EU, Nabucco failed to find supplies to fill it. Its scope was then repeatedly scaled back, but Nabucco West's hopes of routing 16bn cm of Azeri gas fell in the summer as a rival scheme (Trans Adriatic Pipeline) was given the nod by the consortium developing the Shah Deniz gasfield. However, Oettinger refuses to be denied, and said he is now looking at a stripped down version that would follow the Danube.

"Perhaps not under the name Nabucco West, perhaps with other investors, but the infrastructure alongside the Danube will remain an important project, particularly since we expect Romania to become not only a major gas market but also an exporter of gas with offshore gas and shale gas," he said, according to Friedl News. The commissioner said he also hopes to hold "binding discussions" with Turkmenistan in the near future.

Meanwhile, the list of projects also shone a spotlight on the Baltics, whose recent history as part of the Soviet Union has left Lithuania, Latvia and Estonia cut off from European energy networks. At the same time, as current holder of the rotating EU presidency, Lithuania is on the frontline of the worsening trade stand-off with Russia.

That has done little to help it in ongoing talks over a new gas contract, with the current agreement set to end in 2015. Vilnius, which claims to pay the highest price for Russian gas in Europe, has been pushing over the past two years to develop projects such as an LNG terminal - set to launch late next year - in a bid to break its 100% dependence on imports from Gazprom. However, it's struggling to secure a better deal from Russia over its gas imports.

The EU list include the six Baltic Energy Market Interconnection Plan (BEMIP) projects, which aim to finally plug the region's electricity and gas infrastructure into the wider continental systems. "The European Council agreed that the EU internal energy market must be created by 2014, and after 2015 no energy islands should remain in the EU," said Lithuanian Minister of Energy Jaroslav Neverovic at the same presentation. "The list... is a concrete step and the instrument for the elimination of energy isolation that conditions the EU energy islands (including Lithuanian) as well as the creation of the EU internal energy market", stressed the Minister of Energy.

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