Piebalgs analyseert de ontwikkelingen op de gasmarkten voor de landen rond de Baltische Zee (en)

SPEECH/06/282

Andris Piebalgs

Energy Commissioner

Speech at the Baltic Gas Seminar

Vilnius, 8 May 2006

Mr Prime Minister, Mr Chairman of Baltic Gas, Mr President of Eurogas, Ladies and gentlemen,

I am delighted to have this opportunity to discuss energy policy and developments in gas markets with you. Baltic gas, BASREC and Eurogas initiative is a very interesting one and could serve as a model for other regional initiatives, especially in the way it involves the Authorities and the market actors of the Region.

The development of a European-wide gas market began already with the adoption of the first gas Directive, in 1998. This Directive, together with the second Directive adopted in 2003, has the objective of developing a truly competitive, European wide gas market, based on the highest standards of security of supply and consumer protection.

These Directives cannot be seen in isolation, but they form part of a wider effort to create an Internal European Energy Market, including both electricity and gas, based on these core objectives of competitiveness and security of supply. The extension of these markets following the accession of the 10 new Member States has raised important new opportunities and challenges, and I very much welcome the initiative taken to organise this conference to discuss how to best implement the gas Directive in the Baltic and BASREC region.

It is undeniable that creating a competitive and secure gas market in this region has particular challenges. The Baltic's are effectively a "gas island" in the EU, linked only to and supplied by Russia, and in particular one company, Gazprom. The markets in certain other BASREC countries, whilst not "energy islands", are also largely dependent on one single source of gas.

Most national markets in the region remain dominated by the national gas company. The question therefore arises: how can a real competitive market develop where there is only one supplier of the "raw material" in question. Indeed, largely because of this, both Latvia and Lithuania have requested the agreement of the Commission that they delay gas market opening for some years on the grounds that they are what the Directive calls an "emergent market".

However, this position of dependence on one external gas supplier is not unique: many other countries in the eastern part of the EU rely to a very large extent on Russian gas. Equally Spain, for example, relies heavily on Algerian gas, but, following a policy of diversification, is far from being completely reliant on one source. Furthermore, gas is increasingly becoming seen as a commodity - like oil, with limited competition between suppliers in terms of price.

Thus, many of the challenges faced by this region are in fact at least partially similar to those faced by all Member States. Furthermore, this region has much to offer in energy terms in the context of an integrated European market. It has a diversified energy mix, with large-scale hydro-electricity, nuclear, biomass, wind and fossil fuels. The Baltic Sea region also has a crucial role to play in the security of Europe's energy, both as a transit route and in the light of its major gas storage potential.

Indeed, given Europe's expected increase of use of gas in the coming decades, further infrastructure will be necessary - the North European gas pipeline alone will not meet this need. Thus, the Amber-project and the extension of the Yamal pipeline remain vitally important for Europe.

Irrespective therefore of the final view that the Commission takes on the requests for derogation, gas market opening in the Baltic and BASREC area will need to take place; if not today, then in a few years. Thus, the question that we need to consider today is how best to make gas market opening in the Baltic and BASREC area a success.

I believe that the answer to this question is threefold.

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  First, the creation of a real regional market, initially at Baltic and BASREC level and then wider, becoming progressively European-wide in nature,

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  Second, the measured diversification of gas supplies to the region, and

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  Third, the introduction of common measures on security of supply in the wider regional market based on solidarity between Member States.

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  First, therefore, the creation of a real regional gas market. As I already mentioned, this initially needs to be undertaken at the Baltic and some or all of the BASREC level, and then to use this as a stepping stone towards a wider market, finally moving towards a truly integrated single European market. The Scandinavian electricity market can provide a model in this respect - enabling the creation of a wider market on which strong national companies compete effectively with one another. Indeed, the need for an active approach to developing such a regional market is as much applicable to electricity in the Baltic region as it is to gas.

Such a regional market will not however develop on its own, or at least will only do so very slowly. To make real progress requires determination by the governments, energy regulators and transmission systems operators concerned as well as effective collaboration between these actors. It requires taking a co-ordinated approach to market opening in different countries so that similar standards apply, as well as the harmonisation of many difficult technical issues. It is important that work on these issues starts today.

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  This leads me to consider the Second priority for the creation of a regional market, the measured diversification of gas supplies. You will note that I say "measured" diversification. It is important to acknowledge that Russia, and Gazprom in particular, have proven themselves to be a very reliable supplier of gas to the EU over a period of decades. Last week I wrote to Russian Energy Minister Khristenko, together with Minister Bartenstein of the EU Presidency, underlining the importance that we place on the continuance of this partnership of mutual dependence. Given the geographic position of the Baltics and BASREC, it is only economically sensible to consider that the region will continue to rely to a very large extent on Russian gas supplies in the very long term. This is an opportunity: the proximity of the Baltic's and BASREC to Russian supplies gives this region a potential advantage as well as a challenge.

Thus, one key priority must be to deepen the emerging energy partnership between the EU and Russia. Europe needs Russian gas and Russia needs European markets, and for them to be open and predictable. We both have much to gain from a stable, predictable and transparent relationship. Europe clearly needs to speak with one voice in this respect - a central part of an emerging Common European Energy Policy that I shall discuss later.

However, I believe that it is only healthy to move towards some measured level of diversification of supplies. This can be done in a number of ways, via LNG terminals or, most importantly, through connecting the Baltic gas network to Scandinavia and Poland. Through the European network and back-haul, alternative suppliers may be found for customers in this region as far away as Norway and Algeria. The Trans-European Networks programmes of the EU can, and I believe should, contribute in preparing such measures.

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  The third priority for the creation of a regional market concerns the priority that any regional, or indeed European gas market, needs to be founded on the basis of the highest possible standards of security of supply based on solidarity between Member States. In short, we need to have mechanisms in place to ensure that we can deal with unexpected supply disruptions.

As I mentioned earlier, all of these issues are considered in the Commission's Green Paper on a Sustainable, Competitive and Secure Energy Policy for Europe. This Green Paper forms the basis of the emerging consensus for the need to develop a Common European Energy Policy.

The Green Paper starts from the realisation that the world has entered a new energy era, of rapidly expanding energy demand and supply struggling to keep up. With global economic growth continuing at high levels, this new situation, with increasing competition for energy, will, I believe, continue to be the driving feature behind energy markets in the coming years. This global challenge requires a European response; for Europe to clearly identify its objectives and then to pursue them in a focussed manner, speaking with one voice.

This approach received large support from the European Council during its March Summit. With respect to the issue being discussed today, the Council requested that the Commission, among a number of specific energy priorities, "facilitate the realisation of priority interconnection projects contributing to diversification of supply and integration into the EU Internal Market", as well as "making the EU-Russia energy dialogue more effective".

At the end of this year it is therefore my intention to table the first Strategic EU Energy Review, accompanied by concrete proposals.

The Strategic Energy Review will seek to identify the key energy challenges for Europe in the coming years and to propose concrete measures to address them, developing a real European Energy Policy. In particular, we need to be able to collectively answer the key questions facing us. I would like to highlight three:

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  On current trends, the EU's dependence on imported energy will increase from almost 50% today to almost 70% in 2030. Regarding natural gas, our import dependency is set to rise from 50% today to over 80% in 2030.
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  Meeting the challenges of climate change will require a massive cut in carbon-dioxide emissions over the next 25 years, and not just in Europe. This is a global challenge and needs a global answer. It also represents an opportunity for Europe, to become world-leader in the emerging new generation of low carbon technologies, a multi-billion Euro market of the future.
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  Finally, how to secure the massive investments needed to meet future EU energy demand? It is estimated that investments of as much as a trillion Euros will be needed in the EU alone over the next 20 years.

Of course, there are no easy answers to such questions. The Strategic Energy Review, that I intend to produce on an annual basis at least during the lifetime of this Commission, will begin to enable Europe to provide common answers, and then to pursue them collectively. It is important that the Review also leads to concrete action. A package of measure will therefore be tabled at the end of the year. At this stage I envisage that such proposals will cover all the issues that I have discussed today, notably:

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  a priority interconnection Plan for electricity and gas,
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  measures to make energy dialogues with our key suppliers more effective,
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  how to diversify energy sources and suppliers and
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  how to promote security of gas supplies and solidarity between Member States, possibly though measures on gas stocks.

It is too early to discuss the likely detail of such proposals today - the whole point of issuing a Green Paper is so that events such as today's conference can play a real role in shaping Europe's future energy policy.

In addition, at the end of this year the Commission will present its Report on the state of play of the Internal Electricity and Gas markets, as well as the final results of the competition sectoral enquiry. At this point we will be reaching firm conclusions on any additional measures that need to be taken to ensure that our core objective, a real competitive European-wide electricity and gas market, is now rapidly completed.

Again, whilst we need to wait for these final reports before reaching definitive conclusions, I believe that on the basis of the evidence currently available - for example widely varying effectiveness of market opening in different Member States on issues such as unbundling and effective regulation - a finalisation package of measures does appear likely.

Ladies and gentlemen,

Creating a competitive gas market in the Baltic and BASREC region does present many difficult challenges. Experience in markets that have already undergone the process that is just in its infancy here, shows that this takes time and determination to make it work. With such determination on the part of the region's governments, energy regulators and transmission system operators, I have no doubt that it can.

Thank you for your attention.