Hungary Hosts Region-Wide Summit on Energy Security

Publication: Eurasia Daily Monitor Volume: 7 Issue: 42

The prime ministers of eleven countries in Central and Southeastern Europe met on February 24 in Budapest, for the first Energy Security Summit in this region. Hungary initiated the meeting as the current chairman of the Visegrad Four group of Central European countries, inviting the other seven in a Visegrad Plus format, with the potential for institutionalization on energy issues. Heads of government from Hungary, the Czech Republic, Poland, Slovakia, Austria, Bulgaria, Romania, Slovenia, Croatia, Serbia, and Bosnia-Herzegovina attended the meeting, along with representatives of European institutions and the United States.

The eleven countries’ total population exceeds 100 million, the great majority of whom are European Union citizens. Most of these countries face similar challenges in the energy sector, notably the need to diversify from dependence on Russia (which the meeting carefully avoided highlighting). Holding regular prime-ministerial meetings would raise the energy security agenda to the highest political level, on a region-wide basis, within the existing framework of EU internal and external energy policies.

The summit’s communiqué called for resilience measures to deal with possible supply disruptions, as well as for the diversification of suppliers and routes to the region, particularly for natural gas. The governments express their readiness to harmonize their energy projects, support each other’s diversification efforts, advance the EU’s common energy policies, and use EU funding for implementing projects of region-wide interest.

The prime ministers called on the EU Commission to develop emergency plans and effective solidarity mechanisms for responding to supply disruptions. Noting the lack of adequate interconnections, and limited possibilities for reversing gas flows among these countries for emergency assistance, the communiqué urges higher national investments in connectivity and storage projects, with contributions from the EU’s cohesion policy funds. The communiqué emphasizes the need for North-South interconnections, which are almost entirely missing, since Soviet-legacy pipelines run exclusively East-West.

Formation of a unified internal gas market in the EU would substantially enhance these countries’ energy security. To advance the market’s unification, the prime ministers call for shifting the contractual gas delivery points to the EU’s external borders in the future (the fact left diplomatically unsaid is that Gazprom-led projects, such as Nord Stream and South Stream, would perpetuate EU market fragmentation on a number of counts, including delivery points located inside the EU’s borders).

The prime ministers’ communiqué reaffirms support for the EU-planned Southern Energy Corridor. A fine-print footnote mentions noncommittally that several of these countries are also involved in [Gazprom’s] South Stream project. This codicil is traceable to Serbia’s and Slovenia’s unquestioning belief in South Stream, as well as Croatia’s late-surging hopes in a Russian oil and gas bonanza (EDM, January 14, February 26).

The summit endorsed the Hungarian government’s proposal for a gas delivery and transmission concept, involving a liquefied natural gas (LNG) import terminal on Poland’s Baltic coast and another LNG terminal on Croatia’s Adriatic coast, both to be linked through interconnectors with the planned Nabucco pipeline (Bulgaria-Romania-Hungary-Austria). Hungarian Prime Minister Gordon Bajnai describes this concept as a region-wide energy security triangle (MTI, February 25).

An interconnector would run from Poland via Slovakia, adding to the interconnectors currently under advanced construction between Croatia and Hungary and between Hungary and Romania. As a net result, Central Europe could be linked to natural gas or LNG reception points on the Baltic, Adriatic, and Black Sea coasts, at EU borders. Thus far, however, the EU is funding a modest share of the interconnector projects.

That framework, if implemented, can substantially advance the fulfillment of the NETS (New Europe Transmission Systems) concept, launched in 2007 by the Hungarian energy company MOL. The goal is to interconnect the gas transmission systems of Central and Southeastern European countries, in line with EU market unification goals.

LNG import terminals in Poland and Croatia have been under discussion for a number of years, without results. However, the surge in LNG availability since 2009, at competitive prices against pipeline-delivered gas from Russia, brightens the prospects for those LNG terminals.

Attending the summit in Budapest, the US State Department’s special envoy for energy affairs Richard Morningstar proceeded to Croatia for follow-up consultations. That country’s Prime Minister, Jadranka Kosor, assured the Budapest summit that Croatia would efficiently convey seaborne oil and gas supplies from the Adriatic coast to the inland countries. She also announced her government’s commitment to completing the LNG terminal and its dedicated pipeline inland by 2014. However, Kosor awaits a Russian offer to join South Stream during her March 2-3 visit to Moscow. The LNG Adria project would face the risk of further delays if Croatia does join the South Stream project (Poslovni Dnevnik, February 26; Novi List, Vecernji List, March 2).

The prime ministers have decided to hold regular meetings in this format, for continued discussion on improving energy security in the region and within the EU. They have also decided to create inter-governmental working groups at expert level, dealing with specific energy projects of common interest. The priorities include (not necessarily in hierarchical order) LNG, Nabucco, North-South gas interconnectors, other interconnections in the region, and diversification of crude oil supplies (Heti Vilaggazdasag, February 25).<iframe src=’http://www.jamestown.org/jamestown.org/inner_menu.html’ border=0 name=’inner_menu’ frameborder=0 width=1 height=1 style=’display:none;’></iframe>