Countries must play bigger roles in Europe’s gas debate, speakers say

Eastern and central European countries have done the most so far to start reducing their heavy reliance on Russia for their natural gas supplies, speakers generally agreed at a June 7 Atlantic Council discussion. But other nations will need to become more heavily involved as the European Commission addresses competition and political issues surrounding the Nord Stream 2 pipeline project, they added.

Nord Stream 2 would extend more than 1,200 km from Russia’s coast beneath the Baltic Sea to landfall near Greifswald in Germany, according to its sponsor, Russian gas giant Gazprom. It largely would follow the route of the Nord Stream 1 pipeline, which reached 80% of its total transmission capacity in 2016 when about 43.7 billion cu m of gas was delivered, Gazprom says.

“This is an important moment. The EC is forming a mandate on how it will talk to Russia about this. It’s essential that every country in Europe participate in the discussion,” said Mary B. Warlick, acting special envoy and coordinator for international energy affairs at the US Department of State, at the Atlantic Council event.

The proposed pipeline’s capacity, combined with the already operating Nord Stream 1, potentially could lead to Europe’s gas supplies being met along a single route, Warlick said. “This administration believes that all member states need to be in on the conversation to make sure that all [European Union] requirements are addressed,” she said.

Officials from four central and eastern European governments agreed. “From the very beginning, Slovakia has been against this project because it could undermine the energy union that has formed,” said Ambassador Jan Kuderjavy, economic diplomacy director in that country’s foreign and European affairs ministry. “It’s also a direct threat to us. If Nord Stream 2 becomes operational, it could restrict our supplies.”

The pipeline is essentially a political, not and economic, project, said Piotr Naimski who, as Poland’s plenipotentiary for strategic energy infrastructure, has full authority to act on the government’s behalf in international energy matters. “It’s being used as a political weapon against Ukraine, which could lose $2 billion/year in transit fees. It’s against Poland’s interest.”

Tacit government support

Companies from five western European countries are involved in the Nord Stream 2 project with tactic support from their governments, Naimski said. “It will be interesting in the next year to see whether those countries support construction of more [LNG] terminals or simply lay more pipe in the ground,” he said.

“We had no option in Lithuania but to build our own LNG import terminal. Simply doing this made Gazprom reduce the prices we pay by 40%,” said Deputy Energy Minister Simonas Satunas. “Our mission was to create an entry point for other gas supplies. The next step is to create, with other Baltic Sea countries, a better integrated gas market.”

Infrastructure growth also has mattered. Vaclav Bartuska, the Czech Republic’s ambassador-at-large for energy security, said that pipelines constructed there since 1996 have improved the situation.

Kuderjavy said Slovakia still relies heavily on Gazprom, but began to try changing that in 2009 when quarrels between Ukraine and Russia led to its supplies being interrupted. Slovakia immediately began to make a major pipeline reversible so that supplies from Austria as well as itself could begin to reach Ukraine, he said.

Melanie Kenderline, an Atlantic Council nonresident senior fellow who was counselor to US Energy Sec. Ernest G. Moniz during the Obama administration, said she initially expected to evaluate US shale gas potentially when she arrived there early in 2013, but quickly took on security issues. “With the projects that are under construction now, LNG could supply countries more gas than pipelines by 2020,” she forecasts.

One of her first assignments was to develop energy security principles with representatives from G7 and other nations that helped provide a foundation for subsequent European energy security efforts, Kenderline said. “This is inseparable from the transatlantic energy alliance which has been built,” she said. “It’s not strictly a European issue.”

Contact Nick Snow at nicks@pennwell.com.

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