The
European Union is looking at the newly discovered reserves in the East
Mediterranean as a way to boost energy security, sees a role for Ukraine as a
transit country for Russian gas to Europe provided that Kiev implements the necessary
reforms, wants to discuss issues concerning the Nord Stream-2 pipeline and lead
the re-energized efforts to battle climate despite the decision of the US
Administration to pull out of the Paris accord, European Commission Vice
President for Energy Union
Maroš
Šefčovič told New Europe in an exclusive interview.
At the
snow-covered High Tatra Mountains in Slovakia near Štrbské pleso with
breathtaking views of the mountain range and lake, Šefčovič sat down with our
newspaper on October 28 on the sidelines of the TATRA summit to discuss ways of
increasing Europe’s energy security.
“The first thing to say is I think we really
have to appreciate the huge potential of this East Med new gas field because
what I hear from the region is that it could be a new Norway which could bring
enormous benefits to the region, to the countries who actually live in a very
difficult neighbourhood and could use the potential of this natural wealth for
the stabilising of the situation of the coastal countries, of that region and
find new ways how to use cooperation in the region which was so much marked by
the tragedies of war. That would be excellent,” Šefčovič said.
“Second, I think very important to mention is
we see that the gas explorations in the East Med region are developing and I
think this first phase would be very important for how the scale of the project
would be in the end development. Because at this stage I understand that still
not all fields are properly prospected so it moves from one field to another
around Cyprus they are prospecting one field one by one,” he added.
Šefčovič
noted that the first stage of exporting gas from the East Mediterranean fields
would probably be transported to the liquefied natural gas (LNG) terminals on
the Egyptian coast and would be used in Egypt or it would be shipped as LNG to
Europe.
“And then the next phase which is now very
much studied based on the results of the feasibility study which was done which
show that technically the EastMed pipeline between Cyprus and Crete is
possible. Nevertheless, it would technically quite a challenge because you have
very rough seabed and the depth is quite significant, Šefčovič said. “Then, of
course, very much would depend on when and how readily available the gas from
these new gas fields would be and where it would be more needed. Would it be in
the region or would it be in Europe,” he said, adding that all this is being
accessed and the EU has identified the connection between Cyprus and Greece as
a Project of Common Interest (PCI).
“From this
point of view, we see it as a very important diversification project that we
will have, if I can say, a European-owned source in the East Med which would
help us diversify the sources and a new route. At the same time, this project
would be representing quite a big cost so we would need to look for strong
interest and strong support from the business community because I don’t think
it would be possible to finance it only from the Connecting Europe Facility or
from the European Budget because the cost assessment was between 5 and 7
billion euro and it’s more or less the whole Connecting Europe Facility whole budget,”
he said, smiling. “I mean, there would need to be very strong business case,
different sources of financing and also a strong involvement of the business
community so that would be see such an incremental gradual development.”
Asked what
percentage of the total cost the Commission is prepared to grant to the EastMed
gas pipeline project to make it commercially viable, Šefčovič said, “We’re not
ready to tell the percentages at this stage. Because – that’s my personal
observation – if I look at the process for Baltic Connector between Estonia and
Finland that was a project that was much simpler, much smaller and also they
had to really improve the submission a lot and show how much they were ready to
participate and what would be the business part. So to say at this stage that
we would go for this or that percentage would be too premature,” the European
Commission Vice President said.
Ukraine gas transit
Turning to
the gas conflict between Ukraine and Russia that has Russian gas supplies in
the past, Šefčovič told New Europe that he does not expect another gas crisis.
“I’m much more at ease this year than last
year because we’ve been really in a close touch with our Ukrainian partners on
the gas storage filling so I think it was probably a month ago that I checked
the latest figures of the latest gas storage level at 15 bcm, which is very
good start of the season which is very good because they are more energy
efficient, they consume less gas. Last year they managed even with a lower
volume so if this would be the storage level with all that the reverse
capabilities of three interconnectors Slovakia and Poland and Hungary, I think
they should manage quite well,” Šefčovič said.
He said the
European Commission expects Ukraine to complete several “crucial” steps
domestically, especially the completion of the reforms in Ukraine and
nomination and start of an independent regulator.
Šefčovič
said another very important thing is to complete the unbundling process of
National Joint Stock Company Naftogaz of Ukraine. “I had several discussions
also with the prime minister (of Ukraine
Volodymyr
Groisman) and we agreed we need to have very clear roadmap how this could
be done. I think the process is already overdue and the better, the more
transparent way the unbundling would be done, the easier it would be to attract
highly reputable companies into the consortium who would be ready to help with
the management, which would be ready to guarantee the necessary investment for
the renovation of the gas pipeline,” Šefčovič said.
“I spoke
yesterday (October 27) with the representatives of the EIB (European Investment
Bank), EBRD (European Bank for Reconstruction and Development). They are ready
to step in once they would see there is a good law, there is proper unbundling
done, you have reputable European companies. In that case they would have no
problem to provide the financing for the necessary renovation,” the European Commission
Vice President said.
Šefčovič
also added that “a very important element there would be the Stockholm
Arbitrage ruling should be done probably sometime between November and
December, which I hope will bring the final clarification to this dispute which
is already on the table for many, many years. I hope also that this would pave
the way then for the restart of talks between Ukraine and Russia, between
Ukraine and Russia and us on how to secure the gas transit in these conditions
in the post 2019 period”.
Nord Stream-2
Asked about
the Commission’s involvement in plans to construct the Nord Stream-2 gas
pipeline from Russia to Germany, Šefčovič said, “Of course, we are involved
because, as you know, we presented that request to the Council to get this
mandate for the negotiations and we did it, I would say, at expressly stated
preference of many of the Member States. What would be the best way how to
resolve this issue because we had many outstanding, conflicting situations, if
it comes to the legal framework, if it comes to the compatibility of this
project with the Energy Union goals and also in the area what we can do
together for the aim, which was unanimously supported by the EU Member States,
that is the continuation of the Ukrainian gas transit,” he said.
“Unfortunately
it’s still in the Council. I know that the Estonian Presidency is doing its
outmost. We have different positions of the legal services on especially the
direct applicability of the Third Energy Package for the offshore pipeline and
that is one of the reasons why we want to present this amendment to the gas
directive and to make clear there should be no, I would say, ambiguity or
questions marks over the application of the Energy Union, of energy law on the
offshore pipelines. We hope that it would help the Council to accelerate the
work on the mandate so we can really proceed with the negotiations,” Šefčovič
said.
Asked
whether the EU Third Energy Package applies or not, the Commission Vice
President said, “The legal services they have their reserves on this. At the
same, as you know, legal services issue advisory opinion and I know there is at
least almost half of the Member States who is ready to issue the mandate to us.
And I really believe that if you have the issue like in this case that you have
two colliding legal regimes that you have the risk of the legal work that we’re
talking about such a strategic project like the pipeline which became
politically extremely controversial the best thing we can do is to discuss among
us Europeans our priorities and then to negotiate it with the third party, in
this case in Russia with very clear priority in mind that is, of course, the EU
law and the Ukraine and the energy security which we should keep all in mind”.
Asked if
the European Commission would push Russia to keep Ukraine as transit country
for gas supplies to Europe, Šefčovič said, “I think that we need to negotiate
that. First, I’m absolutely sure that if Naftogaz is properly unbundled, if it
is managed with a reputable European consortium, if the investment from the
international financial institutions is made to renovate this pipeline, I think
there is not only political but very strong commercial case to use the system
which is in place and which was working for decades and was working very well.
So we want to make it, of course, commercially very, very interesting but also
we’re stating this as a political priority that for us to have three transit
routes to Europe is much better than to have just one, and especially if it’s
done in a way that puts the Ukraine and Central Europe in a very difficult
situation”.
Turkish Stream
Regarding
the second branch of the Turkish Stream gas pipeline that Russian gas monopoly
Gazprom wants to expand to Europe through Greece and Italy, Šefčovič said that
during his presentation to the Southern European ministers “I told them than in
2030 we would need more or less the same volume of gas as we do today – maybe a
little bit more, maybe a little bit less. It would be around 400 million cubic
metres and, at the same time, I teased them a little bit because I put on one
page all the projects which are being considered, all different pipelines, all
different LNG terminals, all different projects, and in the end it resulted in
the capacity of 900 bcm so more that double of what we would need in 2030”.
Šefčovič
urged the ministers “to be a little more strategic, what we need to support,
what we don’t need to support, where to invest the money because from this it’s
clear that at least half of the assets that are being proposed right now could
end up being stranded and the investment in these assets would not bring back
the revenue or simply would be lost”.
The
European Commission Vice President called for “a very strategic and rational
approach”, focusing on the projects that help Europe to diversify its energy
sources, guarantee energy security and which are “good, safe investment from
the prospective 30-40 years down the road”.
Trump & EU climate goals
Finally
asked about the fight against climate change and the decision of US President
Donald Trump to withdraw from the Paris Climate Agreement, Šefčovič said, “I
think actually that the decision of President Trump had, I would say, very
mobilising effect on climate community all over the world and I would say
especially in the United States. I could tell you that I was approached by many
cities, many mayors with whom we are working under this Global Covenant of
Mayors from the United States. I had several meetings with (California
Governor) Jerry Brown, (former New York Mayor) Michael Bloomberg. I had several
meetings with I would say the international-known American companies and all of
them wanted to make sure that despite the decision of the federal government
they want to do more and to show that Americans care about climate change, if
not on the level of Federal government, on the level of many states, most of
the cities and many businesses”.
Šefčovič said
Trump’s decision “also had an energising effect on Europe because the world in
this respect very clearly came to us and clearly told us how they expect the
European leadership in this respect to be demonstrated not only by our deeds
that it would be the first major economy which would transform all these
commitments into the legal, binding legislation and I’m sure all of it would be
approved next year and, at the same time, we took over such important
frameworks of cooperation like Mission Innovation, like Clean Energy
Ministerial where we took over the Steering Committee and after the Chinese
presidency now the next year will be European Presidency to organise summit in
Øresund, Denmark and Finland will do and after that Canada is good to go. So
now we work in this trio in very strong manner and I think that paradoxically
it had a very energising effect on this climate community”.
The
European Commission, Denmark, Finland, Norway, and Sweden will jointly host the
ninth Clean Energy Ministerial (CEM9) in 2018. Canada will host the tenth Clean
Energy Ministerial (CEM10) in 2019.
https://www.neweurope.eu/article/eu-energy-union-101/