North South Corridor, When can we really expect a coherent market ?
The real date of opening gas connection between the Baltic Sea and the Adriatic Sea is 2018-2020 – agreed in concord participant in the discussion about the North-South corridor at the Economic Forum in Krynica. The corridor is planned to connect LNG terminals in Swinoujscie and Croatia.
"In our opinion, already in 2018 there should be some possibilities to carry out connection work, but we need a crossborder investment decision for that purpose" – estimated Rafal Witmann, a director of development department of Gaz System, a Polish operator of gas pipelines. He emphasized that at the moment crossborder trade in gas was not possible in Central and Eastern Europe, because individual gas pipelines went from the East to the West, and they had no interconnections. Therefore, construction of those connections is a prerequisite for beginning trade, and therefore the market.
Witmann stressed that individual markets of Visegrad Group countries were too small to be attractive for big world’s suppliers, while the possibility of supplying entire raw material used in the region – ca. 40 billion cubic meters a year – to one place would be much more interesting for them.
Witmann remarked also that the annual cost of Russian gas for Poland, Czech Republic, Hungary and Slovakia is $13 billion, while the same volumes at prices valid in Germany would be cheaper by 2$ .5 billion.
"Considering that amount, it is worth to consider construction of certain new pipelines or other facilities, such as an LNG terminal in Poland " – said the representative of Gaz-System.
Paolo Quercia, a Director of an Italian think-tank, CeNASS, noted that the discussed corridor differed from other projects proposed by the EU because it did not require big investment.
"The thing is rather to establish cooperation between the existing networks, eliminate bottle-necks and establish effective cooperation. It rather means redistribution of risk. Instead of demanding from a few countries to ensure 100 percent of supply, it could be distributed among a greater number of states. However, a pre-condition is political cooperation" – he explained.
"Generally the idea of connecting Western Balkans with the Baltic is interesting, because it is against the traditional direction of alliances or conflicts in Europe – the East-West direction" – stressed Quercia.
Professor Igor Dekanić from Zagreb University said that certain elements of that system were already present, while some were still emerging and, realistically, introduction of a coherent market making full use of that connection was unlikely before 2018, and even 2020.
Vice-president of a Croatian gas operator, Plinacro Ratimir Oresković, remarked that a branch of new IAP gas pipeline, supplying Caspian gas, was expected to pass through Croatia in 5-7 years. It will allow to send gas to Hungary and Slovenia through our inter-connectors – he emphasized.
Speaking in turn about the LNG terminal project at Krk Island, Oresković emphasized that works on the feasibility study were almost finished, and a government team was expected to look for partners in that investment within the next few months. The cost of that terminal is estimated at € 600 million, and the cost of necessary new gas pipelines will be another few hundred of millions – he stressed. He pointed in the same time that Croatia wanted to be a reliable partner of the Visegrad Group.
Gy"rgy Harmati, Vice-president of MVM – a Hungarian gas operator, underlined in turn that the EU had no clear energy policy, and countries in the region were trying to implement something potentially closest to such policy. He indicated, among other things, that recently the EC recommended long-term contract, while not long ago the Commission estimated that security of supply could be ensured by spot market.
Marcus Lippold from Hungarian MOL also expressed a similar opinion by saying that EU had no coherent energy policy except of one project, namely the internal energy market. He noted at the same time that as long as Brussels prepared some guidelines, there was still a long way before such market could be established.