Natural Gas in the Baltics: Aiming for Open and Free Markets

On Wednesday, 11 November, Lithuanian MEP Antanas Guoga will be hosting high-level roundtable discussions on the diversification of European natural gas markets, with a focus on the Baltic countries. Polish MEP ITRE Committee Chair, Jerzy Buzek, will open the event.

The first of the panels, entitled LNG terminals - game changers for regional energy security and diversification of supply, includes participants like Stefan Moser, Head of Unit for Security of Supply, DG Energy, European Commission; Lithuania's Minister of Energy, Rokas Masiuli; Jurijs Spiridonovs, Deputy State Secretary of Ministry of Economics; and Kalle Palling, EU Affairs committee in the Estonian Parliament, among others.

The second roundtable, US natural gas in the European gas market - prospects and implications, will include Jean Abiteboul, President, Cheniere Supply & Marketing, along with senior figures in Lithuania's LNG industry.

In preview of the Brussels event, Lithuanian MEP Guoga spoke to Natural Gas Europe about natural gas developments in the Baltic states: LNG terminals, interconnectors, and the promise of more liquid natural gas markets in Lithuania, Latvia, Estonia and Poland.

Of the objectives of the discussions on 11 November, Mr. Guoga says: “We're very keen at the moment to find a supplier, hope to get a good deal from Cheniere, and to get the first shipment of US gas into Europe. We're hoping that first shipment would go to Lithuania from Cheniere's new terminal that they'll have up and running. It was a terminal intended to import and now it's exporting. We'd love to work with them – that's very important and a step towards having all kinds of alternative energy providers and solutions in the future.”

Natural Gas Europe: Mr. Guoga, very recently we've received more details about the Gas Interconnector Poland-Lithuania (GIPL) coming to fruition. What will this project mean for Lithuania, Poland and others in the Baltics?

MEP Antanas Guoga: The plan is to complete it by 2019, so by 2020 we should have it operational and then we'll be interconnected and have another source of energy that will come in, gas from the main European suppliers just in case something goes wrong with what we have at the moment. Obviously, that's a big help. We probably should have had that 10 or 20 years ago – it would have been much better. But better now than never.

It's not going to change our lives by the time it happens. It's going to take a long time to build, but I'm glad it's getting done and that Lithuania's energy is receiving attention and we'll be joining the European Union in every way – we need the Energy Union. That would be a nice effort.

Of course I've heard of the great discount – about 30% - Lithuania has received on gas contracted from Gazprom after the opening of the LNG terminal at Klaipeda. How is this a game changer?

Because of the link to oil and the low prices we're seeing, it probably would've been cheaper anyway. Now this gives us an opportunity to be on the world market – we don't have to be buying from one supplier that we were for years and overpaying by a significant amount. The terminal has opened up and also secured the future of the Baltics and the region.

It's still very important now for the other countries, especially Latvia, to be part of the terminal and able to take supplies. Infrastructure is in place, but we need to support them now in changing regulation according to the Third Energy Package. All we're trying to do is have the opportunity to sell to everyone. That's all we're talking about here with the Energy Union; not that you have to buy from this or that. If Gazprom makes it cheaper, everyone's going to keep buying from them, but if we have a cheaper source from somewhere else, we'll buy it from them. So the more infrastructure we have, the more maneuverability we have – it keeps the price down and makes everyone happy.

How much is that sentiment shared in the Baltic region?

Sometimes people get a bit confused regarding the politics. It's not anti-Russian, we just want to be independent and don't want to be reliant on Russia. That's all. Sometimes people do get a bit too emotional and are not looking at the numbers. If the Russians provide the best price we shouldn't reject that for American gas. It's all about the price, all about the free market. As a politician, that's what I'm striving for, that we're not overly reliant on anyone, and we're trying to be friendly with everyone to encourage them to supply us.

Gazprom has been helping for these markets to become monopolies for so many years. They've done some serious damages to these countries, which was caused by overpaying for gas, so there's a lot of anger. Lithuania was paying the most in Europe which is crazy, and we were the closest country.

What other kinds of opportunities do you see opening up now that Lithuania has access to LNG?

For one, to be able to take gas from America, obviously; the opportunity to make sure that the Baltics are interconnected very quickly, and that we can supply Estonia, Latvia and parts of Poland; opportunities with truck fuelling, so we can do small shipments of gas to certain points in the region. We'll have a terminal ready by 2017 where you can just come with a special truck, load up on gas and go and supply someone – that will be available for anyone on the free market to come and buy gas.

That's my vision that we be open, that everyone can sell to us, and we can sell back in smaller shipments, making it a nice hub for energy – that would be phenomenal.

If you look at the Cheniere story – they originally had the intention of importing gas – who knows if in the future, if we have gas in the Baltics, we might be exporting gas, especially shale gas which is likely to be there. In the future, maybe we'll be using that terminal to export gas. Once you're a player, all kinds of opportunities are opened up. Now Lithuania's a player on the world market. We have to keep looking at the big picture for all opportunities, and if we're free that's already a big achievement, and gives the region a huge opportunity to be competitive.

There is talk of gas links between Estonia and Finland and a memorandum of understanding on cooperation in diversification of natural gas supply and development of a free gas market in the Baltic states for the period 2015-2017 was signed on 16 October between Latvia and Lithuania. How crucial do you see the involvement of Brussels in actualizing such projects?

It's crucial. I think Estonians also are pitching an LNG terminal, too. I can't judge the wisdom of that, but I do know that I'm not against anyone building - if it's funded, then it's welcome.

The more terminals we have, the better it is for businesses. As long as they're not all on the shoulders of government. So I'm not sure Brussels should finance 20 LNG terminals now in the region. We should just make sure that governments have just enough and let business take care of the rest.

I think we have to be more involved to make sure that countries which are currently not well integratedsuch as the Baltics are interconnected and integrated with the EU and even the global markets in every possible way, as soon as possible. Or anywhere else in Europe, if you take Spain and France as examples.

That's what the governments and the European Commission should really focus on: It's not just about giving money, it's making sure that whatever laws in place are effective. Sometimes that has 90% more benefit than a handout and construction of something that might not be as effective.

Given natural gas developments and the potential of some proposals, what do you think remains to be done in the Baltics?

The key is just to be regionally interlinked, and that we have a real and open free market, and that we have another small terminal built that's going to be supplying trucks, so that people will come in and get that gas from the LNG terminal, so that we become a real hub: an interconnected, interlinked hub, fully functional in every possible way and helping the region have a stable, cheap source of gas. That needs to happen fully.

You have made statements in Parliament supporting the Energy Union. As we hear about many Member States putting their national interests first regarding their energy policy, what argument might you make to convince them of the wisdom of the Energy Union?

It's just crazy not to have as much competition as possible. All we're trying to do is free the market and make sure that everyone can compete, so anyone that wants to sell gas to you or electricity or any other source of energy can do that.

The leader of any country, if they're honest, they should always aim for consumers, for the population to have the cheapest possible energy. It makes companies competitive if they're manufacturing. It also gives people lower bills, which is very important.

These are just basic things, and for so many countries to be so interlinked with Gazprom, for example, and I don't mean to be singling them out, but it's strange to have countries just having one supplier of a specific energy, and overpaying as well for many many years.

When there's a small benefit for a small group of people, a whole country suffers, and probably exacerbates people leaving the country – immigration, because the country becomes uncompetitive. Energy is one criteria for business not to open; look at the energy costs of Germany, Scandinavia. It's as important as qualified labor, or labor costs. If you don't have cheap energy you have a problem.

Mr. Guoga, given your past life as a professional poker player, is there any wisdom you might glean from that experience and apply it to the energy security situation of Lithuania and the Baltics?

Yes, I think it's always about thinking ahead, thinking of where we'll be with energy in 20 years' time. That's what seems to be changing: we do seem to be moving towards alternative sources of energy, so maybe we shouldn't over invest into things that will no longer work in the future, that will no longer be effective.

We can see that energy storage is doubling every 2 years, so energy is doubling its benefits. There's a real revolution in alternative energy and also in energy storage. Cars and many other things will be run on alternative energy, and this will change things. It would be great if Europe was ahead of the curve and not behind it.

So a really good strategy would be thinking of where things will be 20 years from now and doing things towards that, because it takes so long in order to achieve certain projects: 10 years, or even longer if we're talking nuclear power plants.

We have to be very clever on how we do it, and if we think very long-term we can make some good decisions.

-Drew Leifheit


 

MEP Antanas Guoga, in cooperation with Natural Gas Europe, in partnership with Geopolitika, would like to invite you to the Conference: “LNG Terminals- Game Changers for Regional Energy Security and Diversification of Supply”. This event is dedicated to analyzing how LNG Terminals and the entry of new suppliers, namely US suppliers, to the European market impacts the Energy Union Strategy of the European Commission. The event will take place the 11th of November 2015 in the European Parliament, room PHS P5B001, Brussels. Coffee will be served during the first panel.

The event is part of Natural Gas Europe’s conference series “Interconnecting Europe”.

Provisional agenda 

9h30 - Opening remarks by Natural Gas Europe, by MEP Antanas Guoga and by MEP Jerzy Buzek. 

10h00 - 1st Roundtable Discussion:

  • LNG terminals - game changers for regional energy security and diversification of supply

[Discussion:  While the existing LNG terminals have been developed by single Member States, they can play an important role on a regional scale providing alternative supply and increasing energy security of neighbor countries. They can also have other important implications and effect on pipeline gas, changes in gas supply contracts, foster alternative uses of gas, contribute to creation of regional gas markets. From the end of 2014 the Lithuanian LNG terminal has introduced alternative gas supply for the first time in history for Lithuania and other Baltic States and other LNG terminal projects (Poland, Croatia) with regional potential are also being developed in the EU. However, LNG terminals in the EU are underused - there is a need to identify and address barriers to fully exploiting the potential of existing terminals on a regional scale. 

Moderated by MEP A. Guoga

Speakers:

  • Mr Stefan Moser, Head of Unit for Security Supply, DG Energy
  • Mr Rokas Masiulis, Minister of Energy of Lithuania 
  • Mr Jurijs Spiridonovs, Deputy State Secretary of Ministry of Economics of Latvia
  • Mr Kalle Palling, Chairman of the Riigikogu (Estonian Parliament) European Union Affairs Committee 

Followed by Q&A session

11h30 - 2nd Roundtable Discussion:

  • US natural gas in the European gas market - prospects and implications

[Discussion:  What implications the US gas deliveries will have on the European gas markets, on the current trading practices and on the existing terminals, also which of them might become the gate for US gas to the EU? How does this impact? Is the era of binding long-term agreements coming to an end?  What are the implications for Europe?]

Moderated by Ms Greta Tuckute, Geopolitika

 Speakers:

  • Mr Jean Abiteboul, President, Cheniere Supply & Marketing 
  • Mr Dominykas Tuckus, CEO, LitGas 
  • Mr Mantas Bartuska, CEO, SC Klaipedos Nafta 

Followed by Q&A session

To RSVP, please email rsvp@minoils.com before November 11th. If you need accreditation to enter the European Parliament, please indicate your full name, date of birth, nationality, type of ID and ID number before November 5th.

If you have any questions or comments, please do not hesitate to contact us at:

Office of MEP Antanas Guoga

Egle Nemeikstyte

Email: egle.nemeikstyte@europarl.europa.eu

Phone : +32(0)2 28 45522

Or

Natural Gas Europe

João Salviano Carmo

EU Affairs Liaison

Email: joao.salviano@minoils.com

Phone : +32 (0)499 736 073

 

 


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