Future Outlook and Current Situation for Security of Gas Supply in Eastern Baltic Region

Authors: Ando Leppiman, Kati Kõrbe Kaare, Ott Koppel

Abstract:

Growing demand for gas has rekindled a debate on gas security of supply due to supply interruptions, increasing gas prices, cross-border bottlenecks and a growing reliance on imports over longer distances. Security of supply is defined mostly as an infrastructure package to satisfy N-1 criteria. In case of Estonia, Finland, Latvia and Lithuania all the gas infrastructure is built to supply natural gas only from one single supplier, Russia. In 2012 almost 100% of natural gas to the Eastern Baltic Region was supplied by Gazprom. Under such circumstances infrastructure N-1 criteria does not guarantee security of supply. In the Eastern Baltic Region, the assessment of risk of gas supply disruption has been worked out by applying the method of risk scenarios. There are various risks to be tackled in Eastern Baltic States in terms of improving security of supply, such as single supplier risk, physical infrastructure risk, regulatory gap, fair price and competition. The objective of this paper is to evaluate the energy security of the Eastern Baltic Region within the framework of the European Union’s policies and to make recommendations on how to better guarantee the energy security of the region.

Keywords: Security of supply, supply routes for natural gas, energy balance, diversified supply options, common regulative package.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1090438

References:

[1] A. Mäe (Ed.), Energy Security of Estonia in the Context of the Energy Policy of the European Union. Estonian Foreign Policy Institute, 2006.
[2] M. J. Bryza, and E. C. Touhy, Connecting the Baltic States to Europe's gas market. International Centre for Defense Studies, 2013.
[3] A. Riley, "Commission v. Gazprom: The antitrust clash of the decade?” CEPS Policy Brief, No. 285, pp. 1-14, 2012.
[4] M. Tsygankova, "An evaluation of alternative scenarios for the Gazprom monopoly of Russian gas exports,” Energy Economics, No. 34, pp. 153-161, 2012.
[5] Statistical report – 2012. The European Union of the Natural Gas Industry, 2012.
[6] Liberalisation of the Estonian Gas Market. Pöyry Management Consulting (UK) Ltd, 2011.
[7] Estonia LNG Investment and Strategy Outlook to 2020 – Analysis of Infrastructure, Trade, Contracts, Market Dynamics and Business Opportunities. Research and Markets, 2013.
[8] Statistics Estonia, http://www.stat.ee/en (26.08.2013).
[9] Future Development of the Energy Gas Market in the Baltic Sea Region. Ramboll Oil & Gas, 2009.
[10] "The internal market in energy: Coordinated measures on the security of energy supply,” Communication from the Commission to the European Parliament and the Council, COM/2002/0488 final.
[11] "Regulation (EU) No 994/2010 of the European Parliament and of the Council of 20 October 2010 concerning measures to safeguard security of gas supply and repealing Council Directive 2004/67/EC,” Official J. European Union, L295/1, 2010.
[12] C. Le Coq, and E. Paltseva, "Measuring the security of external energy supply in the European Union,” Energy Policy, No. 37, pp. 4474-4481, 2009.
[13] "Decision no 1364/2006/EC of the European Parliament and of the Council of 6 September 2006 laying down guidelines for trans-European energy networks and repealing Decision 96/391/EC and Decision No 1229/2003/EC,” Official J. European Union, L262/1, 2006.
[14] K. Kõrbe Kaare, O. Koppel, and A. Leppiman, "The Eastern Baltic LNG terminal as a prospect to improve security of regional gas supply,” in Proc. Int’l Conf. Environment, Energy, Ecosystems and Development (EEEAD'13), Venice, 2013, pp. 158-164.
[15] Joint risk assessment of security of gas supply of Estonia, Latvia, Lithuania 2012. Baltic Energy Market Interconnection Plan (BEMIP) Focus Group on Regional Cooperation, 2013.
[16] R. Bogdanovitsh, "Natural gas infrastructure in Estonia and LNG,” 2012 (in Estonian), http://ftp.jlp.ee/public/Energeetikafoorum/(15.08.2013).
[17] Baltic Energy Market Interconnection Plan. DG-TREN, 2009.
[18] T. Notteboom, E. Delhaye, and K. Vanherle, Analysis of the Consequences of Low Sulphur Fuel Requirements. University of Antwerp, 2010.
[19] "Regulation (EU) No 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for trans-European energy infrastructure and repealing Decision No 1364/2006/EC and amending Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009,” Official J. European Union, L115, 2013.
[20] "Long term infrastructure vision for Europe and beyond,” Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM/2013/0711 final.
[21] Analysis of costs and benefits of regional liquefied natural gas solution in the East-Baltic area, including proposal for location and technical options under the Baltic Energy Market Interconnection Plan. Booz & Company, 2012.