EC to Adopt Security of Supply Package

The European Commission will adopt its “Security of Supply” package February 16, according to the EC's head of Energy Union, Maros Sefcovic.

Speaking at an event at the International Energy Agency February 15, he said it would have four pillars: a revision of the security of gas supply directive; an LNG strategy; a heating and cooling strategy; and more transparency to intergovernmental agreements that could be in contravention of European law.

Despite a sharp fall in the premium paid for gas imports by countries in central and eastern Europe last year, he said markets were still not liquid enough.

“We discovered when preparing this strategy that because of a lack of infrastructure and [because of] the dominant position of a supplier on the market, countries of central and eastern Europe were paying 23% more in 2014 for gas than their western partners; and the same persisted for last year, but the difference in price was 16%. Therefore, I think this is clear that we need more liquid markets, need them better interconnected; we need to diversify our supplies to make sure that competition can really play a role and can benefit from an open, well-working market.”

He said this kind of a market would increase security of supply by allowing energy to flow freely across EU borders. It would create a more competitive market by allowing consumers and producers to enjoy economies of scale, and it would allow the EU to achieve climate targets more efficiently via the setting of common targets.

The EC has still not announced its findings into the probe it launched some years ago into Gazprom's gas marketing and pricing strategy.

More legislation and pipelines

Towards achieving a single market, Sefcovic said there is much to be done in both legislation and infrastructure. “We need to put our energy software and hardware into proper order, so we are working on both of these strands.”

He mentioned the more than 190 infrastructure projects that the EC had or could invest in, about half of which concern natural gas. The aim was to ensure that every single member state will have access to three different sources of gas, that they have access to LNG, and that a new, more vigorous assessment process be introduced to assess how the EU is progressing on its interconnector projects.

An average of 11 years to implement a project like that, he said, is too slow. “We just simply need to be much faster, much better, and therefore we are introducing new systems to make sure that if it comes to infrastructure, strategic interconnectors, we would treat them as strategic and would be must faster in their buildup and execution.”

This, he said, was especially crucial in the new member states of southeast of Europe, where member states are isolated in terms of their ability to access energy resources.

Sevcovic said the effects of energy integration could already be seen. “When I travel to the Baltic countries and see how well they're cooperating with their Nordic partners through BAMIT, how Nord Pool electricity exchange is actually lowering the price of electricity – this is the way to go, the example we want to use for other regions,” he said.

Caspian Sea, Cyprus and LNG

Regarding diversification of energy supplies, Sefcovic said he planned on making a visit to Baku, Azerbaijan, in connection with the progress on the Southern Corridor project, which he called “true diversification” of a route, source and gas, and added that he is optimistic over developments on Cyprus peace talks, which bode well for the eastern Mediterranean region and its prospects for supplying gas to Europe.

In connection with that, he said the energy union's LNG strategy will give it access to the more than half the global supplies of gas. “We Europeans want to be open for this business, to benefit from global developments,” said Sefcovic, who named the US, Canada and Australia as the new suppliers of those supplies.

Canada however is not looking very likely at the moment, with Shell postponing its final investment decision on LNG Canada in the light of gloomy economic reality. And with the LNG oversupply predicted to last until the early 2020s, only the cheapest projects may receive final investment decision.

Responding to a question about proposed Russian pipelines, he pointed up the opposition to Nord Stream 2 as presently envisaged. He said that Gazprom's efforts to solid market share in Europe is a “legitimate goal”, but added that the EC’s condition is for a mutual relationship based on respect of Europe's legal systems, EU law, competition concerns and have energy business “done without any political strings attached.”

Drew Leifheit