Energy Security: The Risks of Not Paying Attention
In an article titled 'The Evolution of Energy Security in the Slovak Republic', authors Andrej Nosko and Peter Ševce, outline what can happen to a country when it doesn’t pay attention to its own energy security.
Slovakia has historically been and remains one of the most vulnerable countries in Europe in terms of energy security.
After failing to secure its own energy supply (and especially natural gas) for years, Slovakia was one of the worst hit countries in Europe during the 2009 Russia-Ukraine gas crisis.
According to some sources, Slovakia lost 100 million Euros a day, or 1 billion Euros over the duration of the entire crisis, and the gas-cut related recession led to a 1-1.5 percent decrease in GDP. National tax revenues in January 2009 dropped by 40 percent (due to both the gas crisis and the recession). Some Slovak companies, as part of their own contingency plans, which were to be invoked in the event of an energy crisis, even began to prepare to relocate parts of their production elsewhere.
Beyond Slovakia's lack of initiative, an assertive economic diplomacy and its unwillingness to pay for improving the security of supply, there are a number of reasons have been put forward why the country had not focused sufficiently on energy supply security risks or diversification strategies.
These include its actual as well as perceived role and importance as a transit country for Russian natural gas and oil, overall higher concentration of imports from a single source, the timing and sequencing in the privatization of energy assets.and the general inability of government to transform its declarations into deeds with a prioritization on this issue.
Slovakia has been the most important single transit country within the EU for Russian gas to Western Europe (via Austria and via Czech republic) and has been second only to Ukraine as a gas transit country. With its technical capacity of more than 90 bcm annually (transporting 2/3 of gas arriving to Europe via Ukraine), it is the largest natural gas transporter within the EU.
Given this situation, Slovakia until 2009, ignored the fact that Russia was building new pipelines and export LNG terminals which create alternative routes from Russia to its major west European customers, bypassing not only Ukraine but Slovakia as well.
The consequence of this was lower supply-security and a weakening in the bargaining position of Slovakia vis-à-vis its Russian partner.
Contributor Andrej Nosko is a Researcher on energy security at the Central European University in Hungary, and Peter Ševce is member of Energy Security Institute in Slovakia
Reprinted with the kind Permission of the Journal of Energy Security