The region of Southeast European (SEE) has the capacity to be an active player
on the European energy map but to fulfill that potential it needs to addresses a
number of issues affecting its energy mix, including dependence on energy
imports, dilapidated production facilities, transmission and distribution losses
and inefficient infrastructure, advisory firm A.T. Kearney said.
The SEE
region is overly dependent on carbon-intensive coal and is not fully exploiting
nuclear energy and natural gas. The SEE countries as a whole emit nearly 30%
more CO2 to supply one unit of energy, relative to the EU27 average and remain
highly dependent on imports of crude oil, petroleum products, natural gas, and
transformed electricity, A.T. Kearney said in a recent regional report which
covers Slovenia, Croatia, Bosnia and Herzegovina, Montenegro, FYROM, Serbia and
Kosovo.
The advisory firm encourages SEE countries to work together to
optimize technology and invest in equipment to quell losses in production,
transmission and distribution of electricity, to attract more private
investments in renewable energy and align their legislation to the directives of
the EU Third Energy Package.
On the backdrop of the Ukraine conflict
between the EU and Russia - which has made SEE and EU energy security an even
more pressing issue, better and smarter cooperation among all regional and EU
stakeholders would be essential in the next few years, with developing a joint
SEE master energy master plan being an essential component, the report
said.
DEMAND FOR OIL PRODUCTS OUTSTRIPS DOMESTIC PRODUCTION
The
demand for petroleum products outstrips domestic production as SEE countries
have very limited oil supplies, making them largely net importers of crude oil.
Only 20% of the oil refined in SEE refineries comes from oilfields within the
region due mostly to the depletion of existing oilfields and few opportunities
for new exploration.
At the same time, some SEE countries, such as
Serbia, have significant reserves of shale rock suitable for oil production, but
so far they have not acquired the technology or developed a business case to
exploit these resources, the advisory firm said.
SEE REFINERIES NEED TO
OVERHAUL BUSINESS MODEL
Findings cited in the report suggest that within
the next three to five years, all but one of the six SEE refineries will need to
change their operating models, undergo regional consolidation, or even close
their doors as they face overcapacity and a lack of operational efficiency while
producing limited amounts of value-added petrochemical and lubricant
products.
On this backdrop, SEE refineries have options going forward,
including pursuing cross-border collaboration and consolidation - Slovenia and
Croatia, for instance, could integrate their supply chains, allowing Slovenia to
secure some of Croatia’s spare refining capacity; securing a more cost-effective
supply of crude; and developing smarter investment strategies.
GAS
LINKS/LNG INFRASTRUCTURE, POWER TRANSMISSION EFFICIENCY IN FOCUS
Gas
pipeline and liquefied natural gas terminal infrastructure that connects SEE to
gas-rich regions will be crucial to establishing a sustainable supply, A.T.
Kearney said, recommending that SEE countries speed up the development and
implementation of EU-compliant legislation that promotes competition in the gas
market.
On the electricity market, the SEE region could bridge its import
gap by improving the efficiency of transformation, transmission, and
distribution.
At the same time, the region's electricity generation
infrastructure - particularly its thermal power plants (TPPs), is in need of
improvement, the report said. "Many TPPs are approaching the end of their life
cycles (most will be shut down over the next five to 10 years), which means
countries will need to invest heavily in new thermal generation
capacity."