26/05/2014
CEU's Energy Policy Research Group hosted a high-level roundtable debate on gas supply security in Central Europe as the crisis in Ukraine escalates and potential supply disruption from Russia appears ever more likely this summer. The May 20 “United in Diversification? Implications of the Russia-Ukraine Conflict on Central and Eastern Europe’s Gas Supply” event included government and industry experts and addressed the critical geopolitical issues as well as practical, day-to-day supply strategies.
Former Deputy Secretary of State at the Ministry of National Development of Hungary Attila Holoda addressed the much-discussed European energy union that would, ostensibly, allow Europe to buy gas collectively, but noted that European countries have “kept the right to have their own negotiations with the biggest supplier: Russia.” He noted the strong capacities in Eastern Europe but underscored the lack of infrastructure. “We have to improve and develop flow capacities from west to east. We have to try to reach same capacity as we have now in direct flow and in that case we have to improve gas infrastructure closer to Western density.”
Addressing the crowd during the second panel discussion, Dirk Buschle, deputy director and legal counsel of the Energy Community Secretariat, called for reforms to Ukraine's ailing energy sector in return for assistance from EU states in the form of reverse-flow gas supplies.
"[Ukraine] has received an advance benefit through the reverse-flows [from EU members] but these have to be earned through serious reforms. We need to help Ukraine, but it has to do its part in integrating into the European market...If we are serious, we have to assist and insist on reforms," Buschle said.
Meanwhile, Hungary's Ambassador-at-Large for Energy Security Anita Orban, argued that better market integration in the Central European neighbourhood of states would allow faster circulation of gas stocks to avoid the risk of disruption experienced most notably in Bulgaria and Slovakia in 2009.
"Our only option is market integration. We are focusing so much on the interconnectors and reverse-flow capacity, but these are all numbers," Orban said. She also wondered about alternative sources for gas. “From where can new pipeline gas come to Europe? Turkmenistan? Egypt? Are these far-off places legitimate sources? When the Eastern Mediterranean is ready for export, can it come to Central and Eastern Europe?” she asked.
As the June 2 deadline for prepayment for gas imports into Ukraine from Russia's Gazprom moves closer, the question of how prepared the EU's Eastern frontier is for another cut-off was the one of the main topics during the debate.
Balazs Lakatos, a manager at Hungarian Gas Storage which operates more than two-thirds of Hungary's storage capacity, argued that the situation facing Europe this summer is very different to that experienced prior to each of the so-called “Gas Wars” of 2006 and 2009.
Hungary's domestic demand has dropped by roughly 25 percent since 2009 and greater interconnections to neighboring markets bring more options for circulating supply, Lakatos said. The summer weather should also reduce the impact on consumers – as long as supply is not restricted for months.
Hungary holds the region's biggest storage capacity of roughly 6 billion cubic metres – or two-thirds of expected national consumption this year - making its gas network a strategic asset for both Central and Southeast Europe. However, storage units are currently only 25 percent full raising questions about how prepared the country is.
Dependance on foreign sources could be reduced by developing and using alternative fuel sources. However, as conference organizer and assistant professor at the CEU Business School and the Department of Environmental Sciences and Policy Michael LaBelle noted, there is not a strong push for alternative energy in this region. In Poland, the minister of economy has said they will not exceed minimum level of alternative energy set by the EU. Hungary's Paks Nuclear Plant will be expanded by the Russian state company Rosatom, mostly funded by a €10 billion credit line from Russia – not exactly a move toward diversification.
The event was sponsored by the Energy Policy Research Group (EPRG), in cooperation with CEU's Departments of Environmental Sciences and Policy, CEU Business School, and the Department of Public Policy. For the complete conference program, visit: http://www.ceu.hu/event/2014-05-20/united-diversification-implications-russia-ukraine-conflict-central-and-eastern-0.
- See more at: http://www.ceu.hu/article/2014-05-23/experts-debate-how-russia-ukraine-crisis-will-affect-cee-energy#sthash.b5H4smmw.dpuf
CEU's Energy Policy Research Group hosted a high-level roundtable debate on gas supply security in Central Europe as the crisis in Ukraine escalates and potential supply disruption from Russia appears ever more likely this summer. The May 20 “United in Diversification? Implications of the Russia-Ukraine Conflict on Central and Eastern Europe’s Gas Supply” event included government and industry experts and addressed the critical geopolitical issues as well as practical, day-to-day supply strategies.
Former Deputy Secretary of State at the Ministry of National Development of Hungary Attila Holoda addressed the much-discussed European energy union that would, ostensibly, allow Europe to buy gas collectively, but noted that European countries have “kept the right to have their own negotiations with the biggest supplier: Russia.” He noted the strong capacities in Eastern Europe but underscored the lack of infrastructure. “We have to improve and develop flow capacities from west to east. We have to try to reach same capacity as we have now in direct flow and in that case we have to improve gas infrastructure closer to Western density.”
Addressing the crowd during the second panel discussion, Dirk Buschle, deputy director and legal counsel of the Energy Community Secretariat, called for reforms to Ukraine's ailing energy sector in return for assistance from EU states in the form of reverse-flow gas supplies.
"[Ukraine] has received an advance benefit through the reverse-flows [from EU members] but these have to be earned through serious reforms. We need to help Ukraine, but it has to do its part in integrating into the European market...If we are serious, we have to assist and insist on reforms," Buschle said.
Meanwhile, Hungary's Ambassador-at-Large for Energy Security Anita Orban, argued that better market integration in the Central European neighbourhood of states would allow faster circulation of gas stocks to avoid the risk of disruption experienced most notably in Bulgaria and Slovakia in 2009.
"Our only option is market integration. We are focusing so much on the interconnectors and reverse-flow capacity, but these are all numbers," Orban said. She also wondered about alternative sources for gas. “From where can new pipeline gas come to Europe? Turkmenistan? Egypt? Are these far-off places legitimate sources? When the Eastern Mediterranean is ready for export, can it come to Central and Eastern Europe?” she asked.
Hungarian energy policy expert Andras Deak, an Adjunct Fellow at the Hungarian Institute of International Affairs, has put CEE gas market developments into an informative perspective by contrasting two "offers" made to CEE countries. On one hand, the Russian offer is a large investment into regional gas infrastructure via the South Stream pipeline, in order to diversify away from the Ukrainian transit route, scheduled to to deliver the first gas by the end of 2015. On the other hand, the EU offers the creation of a single energy market as a way to diversify both routes and sources of gas supply. However, this second offer includes a number of smaller-scale projects such as interconnectors and harmonising market rules that would take more time to implement and the impact on regional prices is uncertain.
As the June 2 deadline for prepayment for gas imports into Ukraine from Russia's Gazprom moves closer, the question of how prepared the EU's Eastern frontier is for another cut-off was the one of the main topics during the debate.
Balazs Lakatos, a manager at Hungarian Gas Storage which operates more than two-thirds of Hungary's storage capacity, argued that the situation facing Europe this summer is very different to that experienced prior to each of the so-called “Gas Wars” of 2006 and 2009.
Hungary's domestic demand has dropped by roughly 25 percent since 2009 and greater interconnections to neighboring markets bring more options for circulating supply, Lakatos said. The summer weather should also reduce the impact on consumers – as long as supply is not restricted for months.
Hungary holds the region's biggest storage capacity of roughly 6 billion cubic metres – or two-thirds of expected national consumption this year - making its gas network a strategic asset for both Central and Southeast Europe. However, storage units are currently only 25 percent full raising questions about how prepared the country is.
Dependance on foreign sources could be reduced by developing and using alternative fuel sources. However, as conference organizer and assistant professor at the CEU Business School and the Department of Environmental Sciences and Policy Michael LaBelle noted, there is not a strong push for alternative energy in this region. In Poland, the minister of economy has said they will not exceed minimum level of alternative energy set by the EU. Hungary's Paks Nuclear Plant will be expanded by the Russian state company Rosatom, mostly funded by a €10 billion credit line from Russia – not exactly a move toward diversification.
The event was sponsored by the Energy Policy Research Group (EPRG), in cooperation with CEU's Department of Environmental Sciences and Policy, CEU Business School, and the Department of Public Policy. For the complete conference program, visit: http://www.ceu.hu/event/2014-05-20/united-diversification-implications-russia-ukraine-conflict-central-and-eastern-0.