High Tariffs Could 'Gum Up Europe's Access to LNG'

High tariffs and missing links in central and eastern Europe's gas grid may prevent the region from benefiting from the LNG glut, according to a gathering of gas experts this week in Ljubljana.

The Energy Community, which regroups EU countries and non-EU states in the region, hosted its 12th Gas Forum in the Slovenian capital on September 20, with more than 140 stakeholders discussing the most pressing issues in the region; it issued a related briefed note September 21. The Forum said more efforts are needed on swift implementation of EU gas network codes in Energy Community countries, which include Ukraine. It also expressed concern that cross-border gas trade was being hampered by above average entry/exit charges at certain interconnection points.

Moreover the Forum stressed that "high interconnection tariffs coupled with missing or insufficient interconnection capacities and legacy contracts may prevent the region from benefitting from the LNG glut," while it also warned that the realisation of competing transit infrastructure projects bypassing Ukraine -- believed to be a reference to TurkStream and Nord Stream 2 -- could reduce the security of supply of many states in the region.

With regard to Croatia's plan to develop an LNG import terminal, experts have repeatedly argued that such a project will remain uneconomic, so long as Croatia imposes high transmission tariffs on gas exports to neighbouring Hungary.  Hungary appears to have since turned its back on Croatia's project.

Energy Community secretariat director Janez Kopac also focused on the role of Ukraine as a transit country for Russian gas: "We are of the opinion that Ukraine’s perspective for remaining a key gas transit country after 2019 is subject to the country’s effective implementation of the [EU] Third Energy Package as well as on enforcing the rule of law. We believe that Ukraine will have a transit role in the future, perhaps with a somewhat different configuration. Nevertheless, the Energy Community – and the Secretariat - will continue to provide its assistance, including to potential EU transmission system operators, so that the transit of gas via Ukraine is not halted."

The CEO of Ukraine's state gas group Naftogaz, Andriy Kobolyev, on September 20 proposed four ways in which the Ukrainian government could get the reform agenda in the country's gas sector back on track. One such action, he said, would be for Kiev to adopt recent EC/World Bank advice. The government in Kiev is due to hold a further meeting with EC's Kopec before the end of this month.

 

Mark Smedley

 


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