Brussels preparing for talks with Russia on Baltic power systems – BNS INTERVIEW

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The European Commission is getting ready to start consultations with Russia over the switching of the Baltic states’ power networks off the post-Soviet system and their synchronization with that of western Europe.

“When we have our next meeting with the Russian energy minister … we will brief him also about this desynchronization process,” European Commission Vice President Maros Sefcovic, in charge of energy, said in an interview with BNS Lithuania.

The Slovak diplomat also said that all parties involved in this process must be sure about transparency of these processes as “I don’t think that Russia or Belarus needs surprise in the field of electricity supply”.

Sefcovic also assured that the Commission would demand compliance with the highest safety standards from Belarus over the Astravyets nuclear power plan, refusing, however, to comment in detail on Lithuania’s declarations calling for blocking power from this facility.

Attending an international forum, held by Lithuania’s social democrats last weekend, the European commissioner also said measures would be taken to make sure Ukraine did not lose gas transit over the construction of the Nord Stream 2 gas pipeline.

– MR. SEFCOVIC, LET US START WITH A BROADER QUESTION. WHAT IS YOUR OPINION ABOUT THE ENERGY SECTOR IN THE BALTICS, AND PARTICULARLY IN LITHUANIA, AND THE CURRENT DIRECTION THE COUNTRY’S HEADING FOR IN THAT FIELD?

– In electricity, I am really very glad, I would like to congratulate the three Baltic countries that we are now progressing quite well to make sure that this synchronization with the European central energy system and desynchronization from the former Soviet one is progressing quite well (…) the desynchronization exercise will be quite costly, quite technically demanding. Now we have a plan, I’m sure that we will find appropriate money so that the Baltic states are finally connected with the continental European systems. But on top of it, we are quite impressed at what has been accomplished already with the „NordBalt“ connection, with the creation, I would say, of the market coupling with the Scandinavian and Nordic countries. Because for me, personally, the Nordic electricity market is probably the most developed, the most modern one. (…) So, I think that in electricity you are on the right path.

And I promised to (Lithuanian Energy Minister) Zygimantas Vaiciunas that when we have our next meeting with the Russian energy minister, which we are planning most probably for November, that on top of our usual topics which we discuss, and this is usually the gas issues and transit through Ukraine, that we will brief him also about this desynchronization process.

-SO, IS IT THE RENEWAL OF NEGOTIATIONS WITH RUSSIA?

– We are going to inform the Russian side that this is happening, what is the plan, and probably to suggest technical discussions, how to make sure that there are no surprises. Because I don’t think that the Baltic countries need surprise, I don’t think that Russia or Belarus needs surprises in the field of electricity supply. And I know that for them what is very sensitive is the issue of Kaliningrad.

I have to say that whenever this issue is raised, there’s a strong understanding from Russian side that you want to be synchronized with the European systems, they just told me: don’t surprise us, it’s a technically quite demanding exercise.

We still have no date confirmed but, for sure, the first occasion that we have, we will inform them about the agreement reached, about the project preparations and the timelines which would be part of that project. And most probably what I think would be the best thing to do would be to start technical consultations, how to make sure that this is technically properly prepared and we would avoid any technical problems.

– THE CONSTRUCTION OF THE ASTRAVYETS NUCLEAR POWER PLANT IS CURRENTLY UNDERWAY. WHAT SHOULD LITHUANIA DO NOW TO MAKE SURE THIS PLANT IS SAFE, AND WHAT COULD THE EUROPEAN COMMISSION DO?

– I think that your diplomats, the ministers of foreign affairs and energy, they have done a great job to make sure that we all know about this power plant and about your concerns, and also thanks to this very intense diplomatic activity, I can tell you, that we pay enormous attention to the power plant in Astravyets. We made it quite clear to the Belarus authorities that it’s very sensitive, it’s very close to your capital (Vilnius), and there can be no other solution, just a 100 per-cent respect for the European norms.

There have been a lot of preparatory works, a lot of discussions with them, inspections done – be it European experts, or from the International Atomic Energy Agency (IAEA).

From our side, we are very sensitive about your concern, we are doing our utmost that all safety concerns, all the security issues are properly treated and this will be really done on the top European level.

– LITHUANIA IS CONSIDERING RESTRICTING SUPPLY OF ELECTRICITY FROM THIS PLANT. IS IT POSSIBLE, IN YOUR OPINION?

– I understand the concerns on this issue. To be concrete we would need to see the technical side of it and legal aspects of such measures. So I think I will be able to tell you when we see how it is in reality. But for now the highest priority is to make sure that all the safety and security issues are properly treated and this is what we are working on right now.

– ANOTHER QUESTION RELATED TO NUCLEAR ENERGY IS THE DECOMMISSIONING OF THE IGNALINA POWER PLANT. CAN LITHUANIA HOPE FOR MORE FUNDING THAN PROPOSED BY THE COMMISSION, I.E. MORE THAN 552 MILLION EUROS IN THE NEW BUDGET?

– I think, we have like three nuclear power plants which are being decommissioned right now. The biggest project is yours – Ignalina. One project in Bulgaria and one in Slovakia. As far as I remember, Lithuania is getting by far the highest share of financial support for decommissioning. (…) I have to say that there is a very clear understanding that for you it is a very important thing and that it was part of the accession treaty and there’s commitment also from the European side, that we should cooperate with you on this in a very close manner. So, I think that you will get appropriate funding (…).

We will see how far we would go and I think now it is a matter of negotiations. (…) Let’s see how the negotiations would look like. Because this time for the first time we will have a big net payer (the United Kingdom) leaving us and we have quite a few new priorities we have to take care of, so therefore also this budget preparation was very different than it was in the past. Now we put it on the table, now it is, I would say, in the hands of member states mostly.

– SPEAKING ABOUT THE NORD STREAM 2 PIPELINE. SEVERAL EUROPEAN COUNTRIES RESIST THIS PROJECT, SAYING THAT IT POSES THREAT TO GAS TRANSIT VIA UKRAINE. DO YOU THINK THE PIPELINE SHOULD BE STOPPED OR THE PROJECT MAY BE CARRIED ON?

– I think that it is one of the most complex issues I’ve had to deal with in my current position because the Energy Union, the project for which I am responsible, was triggered by the feeling of the European leaders that we have a big problem in the field of energy security. (…) The decision was that it (the 2006-2009 Russia-Ukraine gas disputes and gas supply crises in Europe) cannot happen in the future again. Therefore, we went for a very strong diversification program.

Coming back to the Nord Stream project. This project has been from the beginning very controversial because the consortium which is promoting the project was presented as purely commercial. And we could never accepted that argument because I was telling them that I had never seen a commercial project which was so heavily debated on the highest political level. And we have at least half of the member states who are opposed to this project for different reasons, but one of them being that simply for Central Eastern Europe it is not acceptable, that the transit through Ukraine would be shut down because it would have very bad repercussions for Ukraine and for energy security for Central and Eastern Europe.

I have to acknowledge in very positive terms that the new German government is accepting the fact that this project has a political magnitude, that this project is politically sensitive for, I would say, our region and they are very helpful in helping us to conduct the negotiations on preservation of the Ukrainian transit in the post 2019 period. (…) And I am inviting again Russian and Ukrainian representatives for a trilateral meeting, hopefully in November, where we would discuss this issue. Because time is flying, and the transit contract between Gazprom and Naftogaz expires in late 2019. So we need to find a solution, otherwise we will be in a big problem.

On the Nord Stream project. We still insist that what we need is to make sure that European law is properly respected. So we proposed some amendments to the gas law to the European Parliament and the Council. And we have suggested to the member states that based on this we should get a mandate to negotiate with Russia on an intergovernmental agreement (IGA) between the EU and Russia, how all the “architecture” of pipelines should look like. But I have to say that it is not such an easy discussion in the Council and we will see when this gas law could be amended and when we could proceed with the discussion on this IGA mandate. I presume that most probably it will be possible early next year.

– YOU HAVE THE EU GAS DIRECTIVE AMENDMENTS IN MIND, DON’T YOU? SO, IT’S YET TOO EARLY TO SAY WHEN THEY ARE ADOPTED?

– Yes. As far as I see the situation, this is not a very complicated issue. But we have received dozens of technical questions. My feeling is that as the Commission we have answered all of them. But now it’s up to the Presidency to put this item on the agenda. And I believe if it’s put on the agenda, it would get the support of the qualified majority of the Council, but it’s not on the agenda. (…) It’s difficult for us to say when because here we are in hands of the Presidency.

– CONCERNING IMPORTS OF LNG FROM THE UNITED STATES TO EUROPE. AS FAR AS I KNOW, THE EUROPEAN COMMISSION HAS BEEN ACTIVELY WORKING TOWARDS THIS GOAL.

– When it comes to the United States, I’ve had several meetings with new Secretary of Energy Rick Perry and I told him that we are ready for the American LNG. We’ve don our homework through the LNG strategy which was based on building adequate import capacity (…) And the second part of the homework was that we wanted to link up all the member states in the way that each of them can receive LNG. And we are almost there. Because for me, one of the strategic goals when we started was that each member state had access to at least three different sources of gas. (…) But what’s needed now in the United States of America, at first, it would be extremely useful if they got rid of the export licenses.

– WHAT IS YOUR OPINION ON THE LITHUANIAN LNG TERMINAL IN KLAIPEDA? WHAT IT’S ROLE IN THE CONTEXT OF AMERICAN GAS IMPORTS TO EUROPE?

– I think it was a very brave, and I would say, a visionary step what Lithuania did at that time (building the LNG terminal). And you did it on your own and that there was a big discussion also in your country. But I think the wisdom of the decision was that you got access to the global market (…) You have become a regional gas player. And you also have now a big opportunity to use at least the Baltic market, to use the Incukalns underground storage (Latvia) and also through the Baltic Connector, through the GIPL you are now part of a very important energy security gas network.

We are ready for good competition on the European market and in that case your LNG terminal will be very important because it could be the source of LNG imports not only from the States, but also from other sources. And your LNG terminal could be that competition point where the price of gas for the whole region could be decided.

The cooperation among the Baltic countries, projects which would link the Baltic countries through Poland with the rest of the European Union and the project like, Baltic Connector, which would also help to connect the Baltic countries with the Scandinavian and Nordic partners, are very important, especially in combination with Klaipeda’s Independence LNG terminal because it gives you the choice, it pushes the prices down and it puts you in a much much better situation, than you’ve were just a couple years ago.

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