Campaign of Diversification of Energy Sources that Started in Lithuania is Gaining Speed

At a certain time Lithuania that was trying to pull away from the monopoly of the Russian state concern probably was the only one (actually, significantly supported by Günther Oettinger, Energy Commissioner of the European C…

At a certain time Lithuania that was trying to pull away from the monopoly of the Russian state concern probably was the only one (actually, significantly supported by Günther Oettinger, Energy Commissioner of the European Commission (EC) of that time) was fighting against implementation of the Third package of the European Union (EU) in the area of gas, that provided for separation of gas supply lines and gas suppliers and transfer of the pipeline to the operator, which would enable access of various suppliers to the lines (Finland, Latvia and Estonia have not asked that to begin with). The ‘saga’ of transfer of the Third package, that started during the cadence of Seimas in 2004-2008 after a fierce struggle, ended with a victory of our country and a note of protest of the Russian government to Vilnius in autumn 2012.
Furthermore, some stories that started at that time and which seemed desperately lost for Lithuania, is still ‘catching up’. The Polish daily Nasz Dziennik in the article ‘Gas Imperialism’ (13/11/2012) presented a complicated struggle of Ukraine with the energy pressure of Moscow in the historical context of Mažeikių nafta, by reminding a confidential correspondence between the Embassy of the United States and Moscow published by the Russian daily Nezavisimaya gazeta in cooperation with the website , which revealed that Igor Sechin, Deputy Prime Minister of Russia at that time (currently he is the boss of ) ordered the Russian company to block supply of oil to Lithuania by the pipeline in 2006 right after the Polish company purchased Mažeikiai oil refinery company and was waiting for approval of the EC.
Russians gave reasons for suspension of supply with breakdown in the pipeline; Nasz Dziennik came to a conclusion based on correspondence that the real reason for ‘shutting the tap’ was unfulfilled expectation that only Russian companies could be purchasers of Mažeikių nafta. The after-effects of the breakdown have not been yet eliminated and already on 14 May of the current year BNS published a notice that a company Gomeltransneft Druzhba that was operating a segment of the pipeline Druzhba in Belarus finally lost a dispute in Lithuanian courts and would not receive about 884 million US dollar compensation for the oil from the oil company Orlen Lietuva for the segment of that was closed in Lithuania in 2006.
Similar scenarios right now are spreading in Germany, Poland and Ukraine. In recent weeks we can find a lot of news from the ‘front of pipelines’. The only Russian vessel-pipeline layer Akademik Chersky (property of Gazprom) at the beginning of May after 3 months trip reached the Baltic Sea from the port of Nakhodka in Far East, first of all casted the anchor in Gdansk Bay about 30 kilometres to the north west from Baltiysk in Kaliningrad region, then headed to the logistic centre Nord Stream , the port Mukran in Germany.
According to the news agency the vessel transferred to the Baltic Sea, might be used for project completion of the common pipeline of Russia and Germany ‘Nord Stream-2’, we can say, in the final sprint when it was stopped after 94 percent of works have been completed.
The project stopped after Donald Trump, President of the United States, signed the defence budget of 2020 on 21 December, which provided for sanctions against the operators ‘Nord Stream-2’ and ‘Turkish Stream’. Some hours before signing the document one of the main subcontractors of ‘Nord Stream-2’ a Swiss company announced about suspension of works until receipt of necessary information from the government of the USA, although its biggest vessel-pipeline layer Pioneering Spirit was laying the last segment of about 100 kilometres pipeline.
and Vladimir Putin, President of Russia, in February announced that ‘Nord Stream-2’ would be finished until the end of this year or at the beginning of this year despite of sanctions.
Already when Akademik Chersky reached the Baltic Sea, in the middle of May Pavlo Klimkin, Minister of Foreign Affairs of Ukraine called the visit of Deputy Chairman of the Russian Presidential Executive Office and Dmitry Kozak, the main Russian negotiator regarding regulation of the conflict in the east of Ukraine in Berlin with Counsellor of the Chancellor Angela Merkel a negative story to Kiev not only because matters of Ukraine were discussed behind its back, but also because the partners of discussion in the capital of Germany could talk how to circumvent sanctions of the USA in regards to ‘Nord Stream-2’. According to the Ex Minister topics of the dialogue had to be confidential.
Andriy Melnik, the Ambassador of Ukraine in Germany on May 15 answered the potential guest ion in regards to from the first glimpse unclear link between ‘Nord Stream-2’ and Ukraine after Federal Network Agency of Germany refused to satisfy an application of the operator of ‘Nord Stream-2’ submitted at the beginning of the year asking to exempt it from the updated gas directive of the EU (the fundamentals of which have been made by the Third package initiated by Lithuania), under which the operator of ‘Nord Stream-2’ has to be independent from the gas supplier , which means that 50 percent of the pipeline transmission capacity has to be given to independent suppliers. To the concern it means that it will be able to export only half of the anticipated amount of natural gas. Exceptions are probable, however only with sanctions of the EC, which is probably hard to expect, because the European Parliament approved the updated gas directive of the EU as the law of the EU on April 4 of the last year.
The Ukrainian diplomat called a resolution of Bundesnetzagentur, independent from the government, as a big victory in Berlin and thanked Germany for solidarity. Resolution of the German agency was welcomed by Denis Shmygal, Prime Minister of Ukraine, in public and indicated that it demonstrated its loyalty to unanimous regulations of the EU and that Ukraine and its pipeline transit system is a reliable partner of Europe in supply of energy sources to the Old Continent.
Although we can hear voices after all these manoeuvres as if it the project of Gazprom is not exempt from the gas directive of the EU, the project might be totally ‘stuck’. Ukrainian diplomats do not nourish illusions on this issue and encourage not to give up as Olena Zerkal, the Former Deputy Minister of the Foreign Affairs of Ukraine, currently Counsellor of the Chairman of the Board of the Ukrainian national energy company Naftogaz warned in the middle of May in her profile, if Russians succeeded to complete the ‘Nord Stream-2’ (they have a chance to file an appeal to the Supreme Court of Dusseldorf Land and will do that without any doubts) in some way, the transit of energy sources via Ukraine would be equal to zero. Thus, American sanctions would play a major role in blocking constructions as before.
The story of energy ‘diversification wars” is complemented with a piece of news that on 7 May Sweden gave a permission to the Polish operator of natural gas to build a pipeline ‘Baltic Pipe’ in its economic zone in the Baltic Sea, which will be used for supply of natural gas from Norway to Poland via Denmark and which will be beneficial in a strategic point of view to the states of the Middle and East Europe (including Ukraine) and finally to the EU. The price of the project is 1.6 million Euros; one third of its funds are money from the EU funds. expects completing the project by 1 October 2020 and receiving 10 billion cubic meter of gas per year since then.
Poland has been implementing energy sources diversification programme for a few years. Elements of this strategy is not only ‘Baltic Pipe’ – Warsaw increased the import of compressed natural gas from the USA and Qatar to a newly built terminal of compressed gas terminal in Svinouisce at the Baltic and is planning another floating terminal near Gdansk, activated the prospect of its natural gas sources and is investing to building pipelines with neighbouring countries.
Last year Poland imported 9 billion cubic meters of gas. As Artur Bartoszewicz, expert from the Warsaw School of Economy, indicated that the current need of gas is 18-20 billion cubic meters (in case of average rate of economic growth, in the future they would make 26-27 billion) of Poland if we add 4.5 planned own billion to the ‘Baltic Pipe’, growing potentials in Svinouisce terminal up to 7.5 billion cubic meters, other sources, not much is left to that still holds strong positions in the middle and east Europe. Although, first of all Poland is considered as probably the most prospective economic partner of the concern in the region, according to the International Currency Fund, its economy was the second according to its growth rate until 2015 in the Community since 2004 when it joined the EU.
In the opinion of the Warsaw expert, Moscow and have already missed their chance, although cooperation between the EU and Russia in this area would have been beneficial to both of them. For that it ‘got’ significance of the ‘Baltic Pipe’ constantly emphasized by Polish politicians to the whole region.
And finally – in the middle of May news agencies informed about the beginning of the US crude oil import to Belarus, which was agreed during the visit of U.S. Secretary of the State Mikeo Pompeo in Minsk on 1 February. The deal was made with participation of the American companies United Energy Trading, and Polish company . The first batch of 80 thousand tons of oil was sent from the port in Texas to Belarus via Klaipėda on 17 May. As Vladimir Makei, Minister of Foreign Affairs of Belarus, told, oil supply of the USA is a part of its state strategy to diversify energy sources and cooperation with the United States in this area is an important element of energy independence of Belarus. It turned out that even Minsk is under ‘diversification’, which would never get into nobody’s head a decade ago.
I would summarize a leitmotiv of the energy security that has been mentioned here several times with the phrase of Arseniy Yatsenyuk, Prime Minister of Ukraine in hard years 2014-2016 to the country that he told to the TV channel on 15 May: Russian military and power aggression are twin ‘sisters’.
Arūnas Spraunius

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