Strategic Cooperation in Energy: Infrastructure is Key

In a session dedicated to “Strategic Cooperation in the Energy Sector” at the 25th Economic Forum in Krynica, Poland, an electricity transmission system operator from the Baltics offered his company's experiences of regional strategic cooperation.

Explaining that he represented the Lithuanian transmission system operator, LITGRID AB, Mr. Daivis Virbickas, Chairman of the Management Board and CEO, said his company is currently implementing part of Lithuania's energy strategy via the building of cross-border interconnections between Lithuania and Poland, and between Lithuania and Sweden.

“As a company which is implementing strategies,” he said, “I would like to say it is crucial that infrastructure is necessary for cooperation. Without infrastructure you can produce papers, can produce strategies, but nobody benefits from them.”

According to Mr. Virbickas, for building infrastructure on time political will is necessary, and in the wake of its existence it is possible to deal with issues like regulation, harmonization of regulation and getting all the benefits of markets and integration.

Recalling that the Polish-Lithuania power interconnector was first mentioned in 1992, he noted it took 23 years: “Five years to construct, 18 years to discuss about the strategy, get political will on the table, and to go forward.”

The Lithuania-Sweden connection, he explained, is happening much more rapidly, but still entailed the same process.

Mentioning “not in my backyard sentiments,” Mr. Virbickas said, “Such initiatives like the European Union's 'Projects of Common Interest' are helping us to implement infrastructure, and helping communities to understand the importance of infrastructure for the community.”

Cooperation, he said, is crucial in order to reap benefits for regions, states and communities.

Moderator Igor Dekanic hammered Mr. Virbickas' point home: “For strategic cooperation, you have to have infrastructure and that's a basic fact, you have to have gas interconnectors, electrical network interconnectors, gas storages, etc. and for that basic infrastructure, particularly in international relations, you have to have political will.

“Strategic cooperation,” he pointed out, “is somehow very closely connected to the policy.”

In terms of where Ukraine fits into such strategic cooperation, Oleksandr Dombrovskyi, First Deputy Chairman of the Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, Supreme Council, Ukraine, pointed out that there's a war going on in eastern Ukraine.

Of that war, he commented: “This is a crucial factor determining our strategy and decisions made by the president and the Supreme Council.”

Regarding energy sector integration, he mentioned the recent Association Agreement with the European Union. “Ukraine is doing its best to enable implementation of its obligations towards the EU, even in time of crisis.”

Mr. Dombrovskyi noted Ukraine's decisions regarding electricity and gas markets have to be in line with the EU directives and reported that the Ukrainian parliament was deliberating over measures that would lead to closer and stronger integration with the Union.

He said, “In June of this year our parliament adopted legislation on the gas market, which leads to better cooperation of our activities with gas partners in Europe. We've also made a number of technological commitments thanks to assistance from our partners regarding various pipeline transport of gas supplies to Ukraine.

A number of technical problems, he said, have been resolved.

“Thank you for supplying us with gas in the winter,” said Mr. Dombrovskyi, who added that a bill on the electricity market would be put to the Ukrainian parliament in October, in line with the Third Energy Package, allowing for better integration with the country's partners in Central & Eastern Europe.

According to him, a number of agreements have been signed with Poland, Romania and Hungary. “We would like to go further in this direction. These issues are of paramount importance for effective utilization of energy infrastructure in Ukraine, and also from the point of view to effectively use our infrastructure for the benefit of the EU member states.”

He deemed “historic” the EU's decision to pursue an Energy Union, which Mr. Dombrovskyi said comprised the third pillar of Ukraine's actions. “Our integration task is perceived as the task of a good neighbor of the European Union,” he explained.

Within that task, he said that Ukraine sees possibilities for the integration of its gas and electricity infrastructure, integrating it with the corresponding EU infrastructure. Mr. Dombrovskyi contended that although Kiev has shared such plans with Brussels, there is not a single mention of Ukraine in the Energy Union declaration. He offered, “We would like a clearly defined place which we will occupy in the hierarchy of the energy structure in the EU.”

Irrespective of technical problems, he said that the energy sector in Ukraine is very strong.

Recognizing the opportunities for regional cooperation to ensure energy security, Maricel Popa, Secretary of State in Romania's Ministry of Economy, said such cooperation should place an emphasis on national resources and their utilization.

He commented, “From that point of view, Romania welcomes the Juncker package – we hope that this investment plan will contribute to strengthening investors' confidence and trust. For the first time, a part of the budget will be used for the guarantees of the European Investment Bank in the amount of more than EUR 20 billion.”

New investments should bridge development gaps between member states and regions, he opined, mentioning capital investments on transport, energy, infrastructure, and retrofitting.

Romania, he said, will pursue the development of energy efficiency via improvements of energy projects like power transmission grids, the development of interconnectors in Central & Eastern Europe, from north to south.

“Given the greater availability of funding for these purposes, we have drafted a document to improve competitiveness in the period 2015-2020,” said Mr. Popa of Romania, who explained that the measures included are designed to strengthen the country's position in terms of competitiveness, and that the document was in the confines of Romania's energy strategy.

Of that strategy, he offered, “It's main objective is to maintain moderate prices for consumers and more intensively protect the environment.”

Noting that Romania has extensive natural gas deposits – 150 bcm, and geologic reserves amounting to 615 bcm, he said that the country's yearly consumption is 15 bcm; oil reserves, he added, amount to 16 million tons.

Romania, he continued, is looking for investment partners for the development of the country's natural gas deposits. He said, “We will incentivize the growth of investments and will continue to privatize state enterprises, relying on our natural resources utilization.”

-Drew Leifheit