Europe turns the tables on Russian gas

As we move into 2021, Southeast Europe’s concern about security and diversity of energy supply and over-reliance on Russia gas is now history, a senior energy expert has said, noting that after many years of inaction a number of new projects are coming on-stream bringing plenty of gas in the region.

“We move from a period of Russian gas flowing to the region and being distributed in the region to things happening,” Julian Bowden, senior visiting research fellow at Oxford Institute for Energy Studies (OIES) in London, said during an online IENE conference moderated by New Europe on December 10.

“The region’s concern about security and diversity of supply is now history. That discussion now, that problem has come to an end. There is plenty of other gas available and it can reach the market and we’ve seen it in 2019-2020 and we’ll see it even more next year. There’s plenty of supply,” Bowden said.

He stressed that Southeast Europe was a cluster of small disconnected markets. “If we ignore Romania, most of the gas supply was imported – 70% was imported from Russia. Russia was dominant in the supply scene. Most of the gas was coming down through Ukraine, down through the Trans-Balkan Pipeline through Romania, Bulgaria into Greece and the section to Turkey. So, it’s both an import pipeline and a transit pipeline,” the Oxford expert said.

He noted that reliance on Russia was certainly a driver in talking about security of supply.

Bowden reminded that during the last decade there was a large number of interconnector projects, liquefied natural gas (LNG) terminal projects being defined, trying to be put together but basically nothing happened despite lots of initiatives by the European Union. “But then in 2019 and 2020 lots of things started to happen,” he said. “Reexport of gas to Bulgaria started in 2019 and has continued and in terms of the Bulgaria market this gas flow from Greece to Bulgaria was actually material. TurkStream came on stream. Romania started making much greater use that it had before of its interconnector with Hungary and the flow of between Hungary and Romania actually became quite significant,” Bowden said.

He also added that Romania completed phase 1 of the BRUA project that it will help service gas interconnectors.

The Oxford energy expert noted, however, that one of the impacts of Russia’s TurkStream gas pipeline was that the Trans-Balkan system emptied overnight as gas was diverted through the first leg of the new Russian pipeline via Turkey.

Bowden said some of these trends will continue in 2021. He reminded that the Trans Adriatic Pipeline (TAP) will start up later this month and will ramp up during 2021 bringing gas via the Southern Corridor from Azerbaijan into the region and go into Greece and Bulgaria.

He added that the initial idea of the IGB is to load it with gas from TAP. “Clearly, I don’t see Alexandroupolis LNG happening without IGB. Alexandroupolis, if it happens in its current configuration, is way too large for the Greek market so Alexandroupolis is not a Greece project, it’s a regional project and that gas will have to move and, therefore, you will need capacity to move it on and I think that’s where IGB will have a role beyond the Southern Gas Corridor,” Bowden said.

Moreover, the TurkStream onshore section towards Hungary through Bulgaria and Serbia should come on stream. “A lot of it is already built in Bulgaria and Serbia,” he said. “The Interconnector between Greece and Bulgaria (IGB), a project that has been around for many, many years is now being built and should start up in mid 2021. Croatia LNG is starting up in January. All these things can be banked because they are happening, are going to happen. And then we can add to the list as we go to mid 2020s, Alexandroupolis LNG, Romania Black Sea maybe. Now what’s going to happen to the Trans-Balkan Pipeline, are we going to see it reversing into Ukraine? That a good question” he said.

The expert said that another positive development is that the prospects of a regional gas hub are improving fast. “One of the pre-conditions for a hub is diversity, markets being interconnected. I think we can put a big tick on that box,” he said.

Turning to interconnectivity, he said that given the market size and the likely market growth, there is probably sufficient capacity in the interconnectors and planned LNG terminals. “For example, it is difficult to see why in a TurkStream world where there is third-party access – assuming there in to it – why you need to build a separate interconnector between Bulgaria and Serbia – it feels a bit superfluous to me,” Bowden said.

He noted that if you add up all the current and prospective projects, “ironically Russian market share in this region is now threatened”.

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