It is very clear that between Brussels and Eastern Europe new connections need to be implemented to overcome the failure that has been created in recent years.
Between Brussels, on the one hand, and Warsaw or Bratislava, on the other hand, there is only one important subject on which there is a general consensus. In concrete, it is about the negative consequences that Nord Stream 2 would have on gas flow and energy security in Eastern Europe. In 2014, after the annexation of Crimea, the European Commission conducted a series of stress tests, which showed that Eastern Europe has a vulnerable energy security. Why this result?
Because the countries here feed into natural gas from a
single source of import: Russia. Subsequently, Brussels proposed a list of
nearly two hundred projects of common interest to cover interconnections
between eastern European countries and diversify import sources by focusing on
Caspian gas resources. This would, on the one hand, bring competition to the
market, a fair price for this resource and, on the other hand, increase energy
security.It must be emphasized in an open manner that at present the countries
of Eastern Europe are caught in a Russian claw. In this respect, the
construction of the North Stream gas pipeline may allow further connection to
those already existing in Western Europe. As a consequence, any possibility of
Eastern European to supply from other sources would be closed.
Except for Romania, all other Eastern European countries have the status of
transit countries. This status represents their only way to maintain a frail
energy security.
In order to better understand the Black Sea gas situation, it should be noted that besides BSOG and Exxon – Petrom, there is also a third large concession: Lukoil – Romgaz. The concern announced last year that it has made an important gas breakthrough estimated at about 30 billion cubic meters. Since then, absolutely nothing about this project and the reasons are quite simple to deduce.The decision to start production is difficult in this case because the Russians would compete with the Russians on the market. As Lukoil is a Russian company, and the Gazprom gas giant is also Russian, the decision for Lukoil can only come to a political line after a careful analysis in Moscow.
Indeed, the Black Sea gas itself represents a breakthrough of a real success. Furthermore, the fact that this occurred in Eastern Europe would easily be linked to the idea of increasing energy security in this area.
Let’s take the discovery of resources in the North Sea, so in Western Europe, for example. In this case, more security in the West has been brought and, correlative, there is a temptation in thinking in the same way regarding Eastern Europe. Moreover, as I presented above, both European Commission and Romanian officials and even Americans officials have launched the idea that the Black Sea gas will have a very positive impact on gas security within the East of Europe. In addition, the situation of Eastern Europe will be significantly improved by a second alternative source: gas from the Caspian Sea.
The analysis in the previous chapters shown that in Eastern Europe the situation is of a particular complexity one. There has been a strong Russian influence in this area for more than five decades, a very long period of time.Brussels knows these Eastern Europe peculiarities.
For these reasons I have already presented a number of justified political, historical and especially economic features to contradict these statements and further, I will provide more arguments proving that all of these have no real basis.
Another extremely important aspect is that at present the export capacity of Romania in terms of the gas networking system is almost zero. This is due to the lack of functional interconnectors between Romania-Bulgaria and Romania-Hungary.
Although the gas interconnector between Romania and Bulgaria has recently put into operation it will be able to function only after the commissioning of the BRUA gas corridor. Thus, even I could admit the idea that the Black Sea exploits will start in 2019, the gas will not be able to reach any country, either to the East or to the West of Europe.
That is why the hope of the EU officials is the BRHA construction. The Black Sea exploitation has no value without this gas corridor.
However, the pipeline itself may have economic significance without the Black Sea gas. As I presented in the above chapters regarding BRHA, this gas route was thought for Caspian gas and not for the Black Sea gas. But now, since EU officials see this double potential of the corridor, they rushed to invest massively in its construction until 2019, when the start of the Black Sea exploits has been announced. The EU does not know instead about the peculiarities of Romania in terms of property rights on the one hand, and expropriation on the other. The BRHA construction requests for massive expropriations of land from private owners.
In Romania, the process of restitution of confiscated properties during
Communism is still ongoing even if it is at final. Many Romanians have an
uncertain situation in terms of property documents. Another special situation
is that many plots of land are held by numerous heirs which did not resolve
their specific succession issues because the law does not oblige them to make
this operation. Besides all this, the compensations offered for expropriation
are ridiculous, and this fact will rise endless lawsuits in front of the
courts.In addition, in the summer of 2017, Hungarian officials announced that
Romanian gas will be stopped at the Hungarian-Austrian border.
The influence of Russia in this country is huge, so there is a real danger for the sabotaging of the whole BRUA project.Moreover, Hungarian Prime Minister Viktor Orban criticized the EU’s policy towards Russia, adding that Russian President Vladimir Putin has strengthened its country’s international influence. The head of the Budapest government has ironically stated that he has to criticize Russia to be a good European while positive words to Russia are very risky.
In addition, according to the latest statements of the Russian Ambassador to Budapest, Hungary will become a Russian gas hub being a very high storage capacity.
Regardless of the commercial component of the Black Sea gas extraction, there is also a geopolitical one. In the Black Sea exploits are involved several American companies and, as a consequence, the Americans could begin, in the next decade, to supply gas to Ukraine, a country with a huge consumption of 40 billion cubic meters a year, no longer importing from Russia since the Crimean conflict. At present, much of the gas in Ukraine is brought through Poland. Basically, if this happens, the Russians will be replaced by the Americans from the tap, a prestigious blow to Washington and around the world. However, this scenario, obviously, is not very good for Moscow, which will do its best to prevent this from happening. In conclusion, there will be no analogy 3 between the two gas discoveries, in the West and East of Europe. Energy security will have an impact on western Europe and only to a small extent in the East. Paradoxically, Ukraine may be the only country in the East that can take advantage of the Romanian gas, except for Romania that will become 100% independent in terms of gas. In this situation, an eastern non-EU country can be the unexpected beneficiary of massive UE investment.
Apart from all this mentioned above, both Caspian and Romanian gas have a clear destination: Western Europe through the Austrian gas hub in Baumgarden. The reality is that Gazprom’s influence is immense in Eastern Europe. At the same time, Brussels is not very receptive to engaging actively in the Eastern region. The conclusions of this study will draw also other reasons that lead to the same idea: Black Sea gas will have an impact, but not in the East of Europe.
Flavius Preoteasa LLM International Energy Law & Policy
