• Natural Gas News

    Energy Union in Romania: Optimism and Realism



The emphasis of the Energy Union should be placed on implementation in south-eastern Europe and the Black Sea region, says PwC's Vasile Iuga.

by: Drew S. Leifheit

Posted in:

Top Stories, Pipelines, Nabucco/Nabucco West Pipeline, South Stream Pipeline, News By Country, , Romania, Balkans/SEE Focus

Energy Union in Romania: Optimism and Realism

The Energy Union could offer new hope and vision to Europe, but it is a question how much it can be implemented, said Mr. Vasile Iuga, SEE Cluster Leader, PwC, at Interconnecting Europe: Natural Gas in Romania roundtable which took place in Bucharest, Romania.

Still, he said such optimism also required a dose of realism. Mr. Iuga explained: “Let's see how much of what is being proposed will actually be implemented, because over time the EU has brought forth numerous strategic projects, but which have only been partially implemented.”

Thus, he said, the emphasis of the Energy Union should be placed on implementation in south-eastern Europe and Black Sea region, which he said plays an important role in the document. “In paragraph 2.2 it refers to the challenges that our region faces and the commitment of the European Union to initiate actions and the solving of problems in our region.”

Mr. Iuga quoted another paragraph related to South-east Europe: “Considering the vulnerabilities specific to the area, there is a need to improve cooperation in Central & Eastern Europe. The specific cooperative agreement will help accelerate the integration of these markets into a larger common market and will improve the liquidity of these products, allow for the improvement of energy efficiency and, last but not least, the Commission will make specific actions in this direction as an emergency matter.

“This is the first acknowledgement that South-eastern Europe is vulnerable and that the EU must take rapid and concrete steps to solve this matter,” he pointed out.

This he said, was a step back into realism. He commented: “Our region is the most vulnerable in Europe to shocks in terms of gas supply.”

He recalled the 2009 cut-off of supplies through Ukraine and by Russia, which he said had created fear in the public and business community that such stoppages might happen again.

Mr. Iuga stated: “From this perspective, natural gas in our region is not just merchandise, but merchandise with a very high level of geopolitical interest. This is a key component of national security; currently, the region is quite isolated – not connected to the European emerging market, and the history of the last decades shows us that in this region there is no history of cooperation.”

He explained that interactions connected to natural gas are marked by individual rivalries. “And most of the countries in the region have sought individual 'escape plans.' That's why they've been divided and have acted individually – each country wants to be an energy hub and each has its own conditions.”

This, according to Mr. Iuga, had been apparent in deliberations over Nabucco, South Stream, and Southern Corridor projects, whose lessons learned provided food for thought on whether or not to engage in cooperation in South-east Europe.

Offering gas from Turkmenistan as a case-in-point, he said it was a real pipe dream that it could ever make it to Europe in the current geopolitical milieu.

There is a risk, he pointed out, of South-eastern Europe being bypassed by future gas pipeline projects. He offered, “Countries in the region are preoccupied by the fact that the funds made available by the EU will be allotted on a competitive basis to countries such as Spain or Italy. The fundamental question is, how much of the Connecting Europe Facility will actually be implemented in our region?”

He noted that, regarding this, Romania is in a very special position, explaining: “We do have the ability to be the country that produces gas, both for domestic and European needs. But we can also be a transit country.”

Still he admitted that the large infrastructure pipelines have bypassed Romania, and its interconnectors are low capacity.

Poland's interconnector and LNG terminal, said Mr. Iuga, show that it is possible to move beyond discussions.

“Implementation of projects is essential, because investors will risk very significant investments they must make in the long-term in our region only if they have the certitude that the infrastructure needed to bring the resources to the market is built and operational,” he opined.

According to Mr. Iuga, in South-eastern Europe a commitment to the implementation of such projects will be crucial going forward, given that most Energy Union objectives are due to be launched by 2016. “Europe and the region of Europe we are part of cannot afford to fail again in case of a gas crisis,” he said.

-Drew Leifheit