Taking into account the urgency of ensuring the energy security of consumers in preparation for winter, the Energy Community Secretariat outlined concrete measures to mitigate gas supply risks through more efficient usage of existing gas infrastructure and new supply routes in a report published today under the SEEGAS Initiative, aimed at fostering closer cooperation between gas exchanges and transmission system operators (TSOs) in Central, Southern and Eastern Europe.
Indeed, the European Union had identified CEE countries as being the most exposed to Russian gas supply curtailments already 10 years ago. In 2014, a stress test performed across EU Member States and including Contracting Parties of the Energy Community found the region’s vulnerability laid in two weaknesses. The first one related to the fact that several infrastructure projects, which had been launched to increase security of supply after Russia cut exports to Europe in 2009, had not been fully commissioned by the date of the stress test. The second weakness highlighted the fact that many national strategies were insufficiently coordinated which resulted in a sub-optimal level of efficiency in dealing with security of supply issues across the region.
It is true that since 2014, most of the infrastructure projects that were launched had been or are in the process of being brought in commercial operation, allowing the region to access alternative sources of gas, supplied either as LNG to regional terminals in Croatia, Greece or Poland or as pipeline gas delivered from the Caspian region to southern and eastern Europe via the newly commissioned Southern Gas Corridor. Even so, as Europe faces the prospect of a total curtailment of Russian gas against the background of the ongoing political standoff with Moscow over its war in Ukraine, there are still concerns about CEE’s vulnerability to disruptions caused by lack of intra-regional cooperation.
The report, which was prepared in consultation with the region’s gas stakeholders, calls for more efficient usage of existing gas infrastructure and new supply routes.
A region that remains vulnerable and poorly connected
In particular, the report founded that although nearly all surveyed countries (with the exception of North Macedonia that relies on a single interconnector with Bulgaria) benefit from access to at least three sources of supply, only a fraction of the existing capacity is used. During the survey period covering 1 April–30 June 2022, less than 20 per cent of the technically available capacity was used. In particular, the Bulgarian, Polish and Romanian exit capacity was the least used in the surveyed region, standing below 5 per cent. On the contrary, the Polish entry capacity has been the most used, close to 75 per cent.
Regarding liquified natural gas (LNG) terminal usage, it has been very high across the region, with the Croat Krk terminal being the most used, at 84 per cent of total capacity and the Greek Revithousa the least, but still above 50 per cent of capacity. Overall, the report also founded that the most used infrastructure was the Trans Adriatic Pipeline (TAP), with 89 per cent at entry. Also, the Southern Gas Corridor is considered to be of great importance to the region, providing real diversification, particularly if expanded in the future and linking up with a planned offshore terminal in Albania which could help Western Balkan countries to diversify away from Russian gas as well as reduce their dependence on coal.
The report concluded that the region remains vulnerable and poorly connected due to numerous regulatory bottlenecks impeding the establishment of a competitive and resilient gas market. Thus, the Energy Community Secretariat made a number of recommendations on how to remove these barriers, hoping that the challenges facing Europe against a looming energy crisis threatening the energy security of consumers would provide the impetus to recognise shared risks and address them in unison as a matter of urgency.
First of all, it recommended as a matter of priority the application of the EU’s Network Codes at border points between Contracting Parties and Member States as failure or delays in implementing them have already led to multiple bottlenecks regionally. Furthermore, the Secretariat recommended the signing of interconnection agreements between Bulgaria and North Macedonia, Bulgaria and Turkey, Turkey and Greece and Romania and Ukraine.
In particular, the report noted that the Polish TSO, GAZ-SYSTEM, had offered physical exit capacity to Ukraine for a limited time. However, according to the Energy Community Secretariat, the exit capacity “may be needed in the longer-term as Ukraine would depend on natural gas imports from central European markets.” In addition, it recommended that Romania ought to offer “firm and interruptible capacity from its virtual trading point to Ukraine.”
In other country-specific recommendations, Moldova is applauded for the progress made in “establishing the foundation for the implementation of a balancing regime as well as the application of EU network codes at border points.” However, the report also noted Moldova’s delay in “implementing virtual reverse flows (backhaul) at border points which would contribute to regional integration and help the country raise more revenue.” If the backhaul mechanism had been implemented, the revenue of the local TSO, Moldovatransgaz could have been 44 per cent higher in 2020 and 2021 than the real figures reported for those years.