Baltics, Poland Press for US LNG Alternative
The political convergence between the Baltic States and Poland emerged strong during a conference on Wednesday, when Baltic leaders made the case for closer cooperation on energy matters with the United States.
The message is significantly different than the one delivered by South Eastern European countries over the last days, underlining that various regions of the European Union have different interests and face different complexities with respect to gas security and supply.
LITHUANIA AND POLAND TAKE THE LEAD FOR US LNG DELIVERIES
Lithuania and Poland are spearheading the European project to import LNG from the United States.
“We are going in the same direction” Jerzy Buzek, former Prime Minister of Poland and former President of the European Parliament, said during the conference organised by Natural Gas Europe and Geopolitika.
Buzek’s intervention is coherent with the interest expressed by potential American LNG suppliers.
“Europe is a very interesting market at the moment” Helena Wisden, Senior Manager Trading at Cheniere, said at the event hosted by Lithuania’s MEP Antanas Guoga in the European Parliament, adding that stronger regional gas demand would come in handy.
In this sense, LNG exporters are interested in new interconnections in Europe, which would allow the creation of larger and liquid markets markets. These developments would then facilitate US LNG cargoes to Europe.
In October, Energy Minister Rokas Masiulis said that Lithuania is in talks with Cheniere for first shipments in the coming months.
At the high-level roundtable on Wednesday, Lithuanian representatives confirmed that they see the LNG terminal at Klapeida an opportunity to be on the world market, and to decrease reliance on Russian gas. According to MEP Guoga, the investment in LNG capacity is already paying off.
“We had the highest gas and electricity prices in the world” Guoga commented on the scenario prior to Klapeida.
Adding to the recent developments of the gas pipeline project between Lithuania and Poland, the conference at the European Parliament clearly showed that Vilnius and Warsaw are increasingly coordinating their efforts in light of complementary strategies well received by European institutions.
In October, Vice-President of the European Commission Maroš Šefčovič and Paweł Olechnowicz, Chairman of the Board of Directors of Central Europe Energy Partners (CEEP), discussed the North–South Corridor. On November 4, European and American decision-makers and industry representatives prepared the ground for the US–European gas partnership, focusing on the opportunities stemming from Poland’s Świnoujście and Lithuania’s Klaipeda LNG import terminals.
LITHUANIA AND LATVIA: THIRD ENERGY PACKAGE
Lithuania’s Guoga underlined that the country does not want to only pay attention to Polish-Lithuanian synergies. Lithuania, which is the biggest Baltic country in terms of population and gas consumption, does indeed want to supply Estonia, and Latvia.
Guoga also asked Latvian politicians to speed up the reform of the national gas sector.
Jurijs Spiridonovs, Deputy State Secretary at the Ministry of Economics of Latvia, admitted his country’s problems with implementing the Third Energy Package, explaining that Riga is already working to find a way out.
While Spiridonovs pointed out that Latvia is called to deal with Russian pressure in the energy field, which has to do with both Gazprom and Rosneft’s interests, he explained that "gas has no nationality" and that Riga would seek to make its purchases based on pricing.
“We don’t have to be afraid. If Russian gas is cheaper, we will buy Russian gas” he said on Wednesday.
LITHUANIA, ESTONIA AND FINLAND: BALTICCONNECTOR OR ...?
Lithuania is seeking to place the Klapeida LNG terminal the main hinge of the Baltic countries’ energy security strategy. Additional LNG terminals in the region might limit the scope of Lithuanian ambitions.
At the event, an Estonian represenative said that the country might not need a LNG terminal, conditional to a new natural gas pipeline between Finland and Estonia.
“We don’t see any need to have another LNG terminal if we have the BalticConnector” Kalle Palling, Chairman of the European Union Affairs Committee at the Parliament of Estonia, said, referring to the proposed interconnector aimed at connecting Estonian and Finnish gas grids.
Palling argued that including Finland in the Baltic energy strategy would reinforce the push toward reducing reliance on Russian gas.
“It would be beneficial to connect the Baltic States with Finland,” he said, reminding that the gas consumption of the three Baltic States combined is around 5 bcm, which is similar to the Finnish gas needs.
In October, Estonian TSO Elering Gaas AS and Finnish state owned company Baltic Connector OY submitted a grant application to European Commission for co-financing the construction of the Estonian-Finnish gas interconnector.
IN SUMMARY
It seems clear that the three Baltic nations have complementary interests and a similar understanding of the opportunities stemming from US LNG. What remains to be done is to find a way to aggregate the three countries’ demand in a way that equally takes into consideration their needs and the complexities involved.
It also places emphasis on the prospects that projects to connect European gas supply sources from the Baltic, Adriatic, and Black Sea to the rest of Europe are likely to proceed at different speeds. While the Baltic states and Poland are expected to move with priority in their push toward a more integrated market, South Eastern European countries might face higher hurdles, again highlighting the differing approaches to gas and Russia within the European Union.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci