Interconnectivity is the key to effective diversification of gas resources and should underlie a new regional – and pan-European – strategy for energy security. This was the message carried Friday, April 24 in Sofia, Bulgaria by speakers at the Energy Business Forum.
The event was the business-facing opener of “Natural Gas for Europe: Security and Partnership”, an energy summit with politicians from 29 countries of the Black Sea and Caspian region, Central Asia, the Middle East, the EU and the US in attendance. Among keynote participants are President of the European Commission Jose Manuel Barroso, US Special Envoy for Eurasian Energy Richard L. Morningstar, Greek Prime Minister Kostas Karamanlis, Turkish President Abdullah Gul and presidents and prime ministers from seven more countries.
Two ambitious goals of the summit are to lay the foundations of a new European energy policy and intensify dialogue among countries buying, selling or transiting gas.
“The January crisis pinpointed the need for interconnectivity,” Bulgarian Prime Minister Sergei Stanishev said in an opening address at the Energy Business Forum. “The momentum gathered since to strengthen links with neighbouring countries – and by extension Europe as a whole - should not be lost.”
In the case of Bulgaria, this would mean gas links with Greece, Turkey and Romania and reliance on at least three suppliers, he added. Bulgaria was among the hardest hit from the January crisis. Its full dependence on Russian gas supplies incurred 500 million leva (250 million euro) in losses.
Bulgarian Energy and Economy Minister Petar Dimitrov said the multiple-supplier scenario could not only help enhance regional energy security but would also strengthen its gas transit capacity because multiple suppliers most often means multiple routes.
If projects such as Nabucco and the South Stream reach fruition, gas transit flow through Bulgaria alone would swell from 17 to 80 billion cu m, the minister said. This raised a follow-up question that concerns Bulgaria and all transit countries: how to ensure equitable transit fees that would cover gas pipeline investment and operational costs.
He also urged to curb economic expediency and run for a political decision when speaking about large-scale international projects such as Nabucco, South Stream, TGI.
“The more gas pipelines, the better,” Dimitrov said.
Executives from leading gas companies in the region also called for the speeding up of Nabucco, the project that would vent work on the larger Southern corridor between gas supplying countries from Central Asia and Europe. At present, the main setback is disagreement on volumes between Turkey and the Nabucco stakeholders.
“The time for poker play is over and decisions have to be made,” said Jeremy Ellis, business development manager at RWE Supply & Trading GmbH, the gas supply holding at German concern RWE. He expects the May 9 EU energy summit in Prague will end with a breakthrough decision on Nabucco.
John Roberts, an energy security specialist at Platts, upheld Ellis’ stance and pinpointed the central role of Turkmenistan. He deems it one answer to the question of how to bring a major new gas source online.
He also broached the idea for a single transit tariff per km. This could be a fast-track solution to the intractable tariff fixing problem vexing gas selling and transit countries. “If you want to kill a project, charge a political fee on top of that,” he said depicting the current state of affairs.
Head of the foreign international department at Russian gas giant Gazprom Stanislav Tsygankov expects the EU to grant real support for the South Stream project.
In his opening speech to guests at the Energy Summit, Bulgarian President Georgi Purvanov admitted the European energy market was underdeveloped and its infrastructure would need 400 billion euro in investments through 2030. The EU is yet to come up with a harmonised regulatory framework. Much work needs to be done to ensure diversification of energy resources.
To overcome an obsolete approach toward energy, Europe must start work on a new energy strategy which would ensure that the EU emerges as a flexible and competitive market. According to Purvanov, the cornerstones of the blueprint should be a common and long-term regulatory framework, an interdependent gas infrastructure, the construction of more gas storage facilities and sites for regasification of liquefied natural gas.
Purvanov also urged for the setup of an observatory of the European Community, which should ensure effective monitoring of energy flows and investments. It should work hand in hand with the market observatory of the European Union. Bulgaria is ready to host the headquarters.
President of the European Commission Jose Manuel Barroso upheld the need for more interdependence line but underlined it should not be at the expense of national interests. “Interdependence should be balanced out by the principle of solidarity,” Barroso added.
The EU has assigned 3.75 billion euro for energy projects, the president said.