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The Warsaw Voice » Business » June 3, 2015
Central Europe Energy Partners
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Europe Needs North-South Corridor
June 3, 2015   
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The European Union needs to fundamentally transform its energy sector in order o provide member states with secure and affordable energy. This is the main conclusion of the Completing Europe: From the North-South Corridor to the Energy, Transportation and Telecommunications Union debate that took place in the southern Polish city of Katowice April 21.

At the debate, panelists representing European energy markets and public institutions expressed support for the North-South Corridor proposal put forward in a recent report by Central Europe Energy Partners (CEEP) and the Atlantic Council.

The report’s main recommendation is to create an integrated set of energy, transportation and digital links across Central Europe. According to CEEP and the Atlantic Council, the network should stretch from the Baltic to the Adriatic and Black Seas. Its energy component features a 15-billion-cubic-meter gas pipeline from Świnoujście in Poland to Krk Island in Croatia, with proper LNG facilities. Other key energy projects include a set of Balkan interconnectors reaching into Serbia, Macedonia, Bulgaria and other nations, as well as the East-West Corridor Gas line stretching from Germany to Ukraine via Poland.

The North-South Corridor is needed not only for energy security but also for diversified energy sources at affordable prices. Paweł Olechnowicz, Chairman of the Board of Directors of Central Europe Energy Partners, said, “As the Central Europe Energy Partners, we understand that access to competitively priced energy is one of the key drivers of economic growth. With both energy producers and energy-intensive industries on the board of our organization, we work hard to empower consumers by providing them with choice and creating flexibility to manage demand and supply. The network of energy lines, transportation routes and telecommunication links that we envision would stretch from the Baltic to the Adriatic and Black Seas. It would greatly enhance the security of energy supplies through constructing an infrastructure to deliver new sources of gas, oil and electricity to the continent. This is indeed a highly complex project that demands involvement and coordination from numerous partners. That is why resolute action is needed at the EU—and not only regional—level. Support for this process through available Community funding instruments should be reinforced, and European financial institutions should be fully involved.”

Integration between Western and Central Europe should be strengthened, not only through treaties and political steps, but also via investment in energy infrastructure. Ian Brzezinski, Senior Fellow at the Atlantic Council’s Brent Scowcroft Center on International Security, said, “The effort to build a Europe whole, free and secure must continue. A key foundation stone of that vision is the completion of a single European market. This is not just a question of political and regulatory cohesion. It is also very much a matter of infrastructure that will bind together the economies of Central Europe and that region to Western Europe. The North-South Corridor is critical for that vision to be fulfilled. If implemented, the Corridor will provide the EU and the whole trans-Atlantic community with strategic benefits. In addition to integrating the economies of Central and Western Europe, it will enhance Europe’s energy security, in part by diversifying its energy supply. The Corridor will also increase the economic competitiveness and resiliency of Europe as a whole in the global marketplace. Last but not least, the efficiencies provided by the North-South Corridor will help Europe meet its climate goals.”

The projects outlined in the report are consistent with the 315-billion-euro Juncker investment plan and the Energy Union package. Dominique Ristori, Director-General of the European commission’s Directorate-General for Energy, said, “The goal of the Energy Union is to give EU consumers—both households and businesses—secure, sustainable, competitive, and affordable energy. Achieving this goal requires a fundamental transformation of Europe’s energy system. This applies to not only legislation, but also infrastructure, which is currently aging and is not adjusted to the market’s needs. On top of that, ‘energy islands’ continue to exist as many markets are not properly connected to their neighbors. This adds to the costs faced by consumers and creates vulnerability in terms of energy security. For this reason, the North-South Corridor should serve as one of the backbones of Europe’s energy security. By linking Central European markets both with each other and with the western part of the continent, the Corridor is essential to improving the security of supply and strengthening the EU’s internal market.”

The main, long-standing challenge related to the North-South Corridor is to get EU members to agree on prioritizing this project. Prof. Jerzy Buzek, Chairman of the European Parliament’s Committee on Industry, Research and Energy (ITRE), said, “More than 10 years since the EU’s biggest enlargement, we see the continent still not fully connected, with energy and resources not being able to flow freely wherever needed. Western Europe has been successfully integrating for more than half a century, also in terms of infrastructure connections. The post-2004 member states in Central and Eastern Europe still have, however, substantial catching up to do in this regard—in becoming interlinked both with the West and along the strategic North-South axis. We need the North-South Corridor to bring together the Baltic, Adriatic, and Black Seas, but also to integrate the whole of the EU, and our neighbors in the Energy Community, into one coherent internal energy market. A market where industry can prosper and bring new jobs to the continent, and where consumers can benefit from lower energy bills.”

The North-South Corridor puts a key emphasis on the development of infrastructure in the energy sector. Daivis Virbickas, Chairman of the Management Board and CEO at Litgrid, Lithuania’s electricity transmission system operator, said, “As the owner of electricity infrastructure, we also see the responsibility and understand the importance of our role in connecting markets, which will bring new opportunities for our businesses and benefit societies from the whole region.”

The North-South Corridor will stimulate the creation of a single gas market and strengthen the security of gas supply in the region. Jan Chadam, President of the Management Board at Poland’s Gaz-System, said, “In Poland, the Corridor will feature extensive infrastructure in the western, southern and eastern parts of the country. Thanks to that, our system will be effectively linked to those of our neighbors and allow Poland and other CEE countries to be supplied from global LNG markets. As the largest transmission system operator in the region, we will be able to thoroughly modify the gas supply system in Poland and create technical possibilities to transport gas through Poland to Central Europe.”

While global oil markets are undergoing dynamic change, the political situation in many countries is far from stable. Dariusz Zawadka, Vice-President of the Board of PERN Przyjaźń, a Polish oil transportation and storage company, said, “If the European economy is to remain competitive it needs to be provided with the security of energy supplies. The road to this leads via Gdańsk, where a modern oil terminal is being constructed by PERN Przyjaźń. The terminal will diversify the supplies of hydrocarbons but also serve as the first real step towards creating a North-South Corridor from the Baltic to the Mediterranean in terms of oil supply. This would largely enhance the security of supplies in the region and improve its competitiveness on global markets.”

The total cost of the North-South Corridor project would be 50.5 billion euros. Of this, 27 billion euros would be allocated for the cost of projects in the energy sector (oil, gas, and electricity), 20 billion euros for transport, and 3.5 billion euros for telecommunications. This is only a small portion of the infrastructure investment needed up to 2020, which the European Commission in 2011 put at anywhere from 1.5 trillion to 2 trillion euros, or an average of 150-200 billion euros annually. Ensuring long-term energy security in Europe will cost about one-third of the EU’s annual infrastructure budget.

The Completing Europe report was presented and discussed during the European Economic Congress in Katowice, Poland, April 21.

Central Europe Energy Partners (CEEP) represents the interests of energy and energy-intensive companies from Central Europe in order to strengthen the region’s energy security as part of a common EU energy and energy security policy. CEEP is the first major body to represent the region at the EU level. It is an international non-profit association with its headquarters in Brussels and a branch in Berlin.

By combining its capabilities and experience and enhancing cooperation between energy and energy-intensive companies and research institutions, CEEP identifies and addresses common problems and proposes solutions, while facilitating successful implementation of the EU’s energy and energy security policy. Furthermore, CEEP takes an active part in the process of creating EU laws for the energy sector. Roughly 70 percent of these laws are determined at the European level.

CEEP currently has 25 members representing the energy sector, energy-intensive companies (dealing with coal, gas, oil, electricity generation and transmission, renewables, steel, chemicals, etc.), universities and scientific institutions. The organization covers Croatia, the Czech Republic, Lithuania, Poland, Slovakia, Romania, and Ukraine. Its member companies have over 50 billion euros in annual revenue and over 300,000 employees. CEEP’s nonprofit status underlines the organization’s independence and transparency as one of the most important stakeholders within the EU’s energy and energy security policy areas.
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