GAS SUPPLY POSSIBLE DISRUPTIONS EC: concerns over the consequences for SEE countries

In October, the European Commission addressed the European Parliament and the European Council on the matter of ‘Preparedness for a possible disruption of gas supplies from the East during the fall and winter of 2014/2015’, a report on the findings of the South-East-European Focus Group.

According to the report, one of the issues of concern is related to the interconnector between Romania and Bulgaria. “This infrastructure that receives EU financial support under the European Energy Program for Recovery was initially foreseen to be operational by the end of 2013 but has not been finalized yet,” the report reads. It further says that “information received from both Member States certainly makes it clear that urgent action is required in order to ensure that the outstanding issues of this project are resolved. However, given the apparent complications of the project, it is unlikely to be finalized for the coming winter. Nevertheless, clear political commitment from both Member States is necessary to overcome technical and organizational challenges and finalize the project in the shortest timeframe. In addition, the low pressure in the Romanian system remains problematic with respect to enabling more substantial cross-border flows to Bulgaria once the pipeline is in place but also to and from Hungary. This strongly underlines the need for all regional strategic infrastructure (domestic and cross-border) to be put in place expediently.”

The document also mentions the fact that Romanian national reports mention in a worst case scenario of gas disruption, a more complex supply scheme that could involve an agreement with Ukraine by which the latter allows flows from e.g. Slovakia to be directed to Romania and possibly Bulgaria through its system. In this case, the interconnector between Romania and Bulgaria is essential. As far as the connection between Romania and Hungary is concerned, the document reads that this connection is about 4 million cubic metres per day. This figure is however further constrained by internal bottlenecks in the Romanian system highlighting the aforementioned general lack of solid gas supply possibilities within these Member States.

The document concludes that the SEE Focus Group Member states “remains very exposed to either a Ukrainian transit or a full Russian supply disruption.”

Among the Commission’s recommendations, it stands the one saying that “Member States in the focus group relate to increasing flexibility in production (where applicable) and increasing withdrawal rates from the underground storages, but neither measure is considered sufficient to resolve a deeper supply cut. In any event, a faster usage of storages will also have repercussions both on future availability in case of a prolonged crisis as well as physical characteristics as storage withdrawal rates drop as storage volumes decrease.”

Common recommendations point to the need for more transparency, to the need to increase the bilateral and regional perspective, to the need to apply the EU market rules in consistent and proportionate manner, to the need to finalize the projects in time and to the need to ensure that fuel switching can be carried out.

Specific recommendations for Romania point to several issues:

  1. Take all necessary measures to overcome challenges of finalizing the Romania-Bulgaria interconnector in the coming months. It is the understanding of the Commission that delays of this project have been two-fold: technical issues related to the construction of the Danube crossing and problems concerning the pressure difference between the Romanian and Bulgarian systems. As has also become clear from the Romanian national report, which builds on an autarchic perspective but experiences significant shortfalls, interconnections are crucial in increasing security of supply;
  2. Romania should by 31 December 2014 work out a clear definition of protected customers in line with provisions of the Security of Gas Supply Regulation. It is important to delineate this group both from the point of view of Romania’s obligations under the Security of Gas Supply Regulation as well as to allow less sensitive groups of customers to react to price signals in case of serious shortages. In view of the significant potential shortfall during the winter months it is crucial to delineate precisely which – limited – customer groups the Romanian authorities want to protect in a particular manner;
  3. Investigate (as starters) short-term feasibility of making full use of Hungarian-Romanian interconnector, potentially bridging apparent limitations within the Romanian system to allow flows reaching capacity of the interconnector. At the same time take necessary measures to allow higher flows towards Hungary;
  4. Investigate possibility of supplying Moldova via existing pipeline network in case of lack of flows from Ukraine. Romania should undertake to ensure supplies reach Moldova in the case of a gas supply emergency – on the basis of solidarity –. It has not done so in its national report so it is important that this is made clear in bilateral discussions;
  5. Urgent publication of storage level data by Romgaz. EU-level transparency data on storages has proven a very valuable tool to monitor and debate EU security of supply policy. So far the Romanian storage system operator is not a member of Gas Storage Europe (GSE) nor is it providing data on gas storage volumes to GSE. Romania is thus the only Member State with underground storage capacity which is not reporting any data for which there appear to be no reasonable explanation.

The South-East-European (SEE) focus group was defined, for the purposes of this stress test exercise, as consisting of Greece, Bulgaria, Romania, Hungary and Croatia. These Member States were selected particularly for their mutual dependency and subsequent reliance on one or few Member States for deliveries of gas in case of a disruption either of the Ukrainian route or of Russian supplies in general.

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December/January 2015

June 2017