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Geopolitics of Energy: the Reason and the Gains of Nordic-Baltic Cooperation

Geopolitics of Energy: the Reason and the Gains of Nordic-Baltic Cooperation. H.E. Dalia Grybauskait ė President of the Republic of Lithuania The Norwegian Institute of International Affairs , April 5, 2011. Energy security challenges. How energy becomes geopolitical? No own resources

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Geopolitics of Energy: the Reason and the Gains of Nordic-Baltic Cooperation

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  1. Geopolitics of Energy: the Reason and the Gains of Nordic-Baltic Cooperation H.E. Dalia Grybauskaitė President of the Republic of Lithuania The Norwegian Institute of International Affairs, April 5, 2011

  2. Energy security challenges How energy becomes geopolitical? No own resources Dependence on single external supplier No energy interconnections Not developed sub-regional or regional energy market Not developed renewables Similarities and differences Norway is a Green island with its 58 % of renewables. Lithuania together with other Baltic States is an Energy island Lithuania closed Ignalina NPP, but has no interconnections with the EU Norway is gas exporter, Lithuania needs LNG terminal to have several gas suppliers Prices for energy recourse are decided by the “market hand” in the Nordic countries and in Lithuania – by Gasprom hand Energy security challenges implies importance of the Nordic-Baltic cooperation 2

  3. Possible Exit Strategies from Isolation • Prudent exit strategy from energy isolation is needed 3 • Building energy bridges • Electricity interconnections (NordBalt, LitPolLink, EstLink1, EstLink2) • Gas link (Lithuania-Poland) and LNG terminal (in Lithuania) • Creating open and transparent energy market • Common Baltic electricity market – Lithuanian initiative • Becoming a part of NordPool market • Integration into the Continental Europe‘s common electricity system (ENTSO-E)

  4. Plan for Electricity Market 2011 Creation of common electricity market in Baltic States 2009 Isolated Baltic electricity market 2015 Integration of Baltic States into Nord Pool and Continental Europe electricity markets Common Nordic and Baltic electricity market NORD POOL PX Estlink I Estlink I Estlink II Estlink I NORD POOL PX Common market Swedish-Baltic link LitPol link Polish PX Gielda Energii Polish PX Gielda Energii Polish PX Gielda Energii Baltic Countries in NordPool – higher competitiveness and better trade opportunities in the whole region

  5. Natural gas prices (USD/1000m3): Lithuania vs. Germany & US

  6. From Political Gas Price to Market Price Solidarity is needed in securing energy interests of the whole EU by developing common external energy policy 6 • Goals • Establishment of the market • Alternative supply • Competitive price • Approach • Creating all necessary conditions (legal, infrastructure) for the market • Implementation of the EU third energy package directive  full ownership unbundling by separation of gas supply from gas transmission • Projects • LNG terminal • Interconnection of Lithuania–Poland gas networks • Underground Natural Gas Storage in Syderiai • Gas pipeline from the Baltic sea to the centre of the country

  7. Nuclear Safety: Joint Responsibility Common Baltic and Nordic concern – no tolerance for compromising on nuclear safety 7 • Future projects • Regional Visaginas NPP in Lithuania - needed, but meeting highest nuclear standards; • NPPs in Belarus and Kaliningrad (Russia) – no proper environmental impact assessment, no regulatory institutions in Belarus; no observation by international community • Lessons to learn (Chernobyl, Fukushima) • Decisions by European Council (March 24-25) • Highest security standards for the EU NPPs and for NPPs in the neighborhood • Stress tests existing and future projects

  8. Nuclear Energy in the Baltic Region Ignalina NPP NPP NPP NPP Belarus NPP Kaliningrad NPP Distance from planned NPP’s 1. Belarus NPP: ~ 23 km to Lithuanian border ~ 53 km to Vilnius 2. Kaliningrad NPP: ~ 11 km to Lithuanian border

  9. Nordic-Baltic Cooperation – Key to Energy Security Energy security needs call for stronger Nordic-Baltic ties. Stronger Nordic-Baltic ties in energy opens more opportunities for Nordic companies. 9 • Nordics came first and gained most: • Nordic Countries is major exporter to the Baltic States; • Banking sector; • telecomunnication; • Nordic-Baltic energy cooperation – the best chance for Nordics to gain even more: • Interconnections (NordBalt, EstLink I & II) will ensure electricity trading possibilities in the Baltics and North-Eastern Poland; • Power market (NordPool) will ensure the same rules to trade; • Norwegian companies should not loose a chance to take a lead in gas sector (LNG); • Coordinated approach to nuclear safety in our neighborhood will increase security of the Nordic-Baltic region.

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