Integrated Single Market in CEE: Pieces falling into place [Promoted Content]

The pieces of a single gas market in Central & Eastern Europe (CEE) appear to be falling into place. The European member states' commitment to diversification, with some help from the European Commission, is helping to realizing the North-South Gas Corridor project. 

Two small, yet significant sales and delivery of spot-priced liquefied natural gas from the United States landed on the shores of Poland and Lithuania this summer – game changing events. For decades, countries in the CEE region have mostly purchased gas from a sole supplier, Russia's Gazprom, which has traditionally charged them—compared to western hub prices—exorbitant prices.

A historic delivery to Poland

Poland’s Swinoujscie LNG terminal having been in operation for about a year, the beginning of June saw the first delivery of an LNG cargo from the United States to Poland, a historic delivery of natural gas from America to a former east block country.

Cheniere Energy successfully delivered the liquefied natural gas shipment to Poland’s Swinoujscie LNG terminal on 8 June.For Poland, this was a milestone in its diversification efforts to wean itself off of gas from Russia’s Gazprom. And for Cheniere, it was the company’s first shipment from its liquefaction terminal in Louisiana to a country in Central & Eastern Europe, the equivalent of 95 million cubic meters of gas sold at spot terms. The US gas exporter hopes it’s the first of many to come.

Lithuania gets US gas

In Poland's wake, Lithuania would also receive supplies of American natural gas via and LNG shipment from Cheniere last summer. Following the sale at the end of June, Cheniere inked a deal with Lithuania's ’s state gas trader, Lietuvos Duju Tiekimas, further diversifying the Baltic country’s sources of natural gas. The first liquefied natural gas (LNG) cargo from the United States was unloaded at the Lithuanian import terminal in the port of Klaipeda on 21 August.

While some of the gas was to the country's national gas transportation system, a portion of it dedicated to customers in Latvia was placed in the Incukalns underground gas storage facility. Lithuania's energy minister commented that the unloading of the cargo further increases the energy independence of Lithuania and the whole region.

The diversification of CEE gas markets

Clearly, the ability of countries like Poland and Lithuania being able to access to new sources of natural gas has provided the necessary competition for those stuck in a gas market monopolized by one supplier. LNG cargoes from other suppliers of natural gas at can now be purchased at variable “spot” prices, giving CEE countries an alternative to long-term contracts with “take-or-pay” stipulations. These days, Gazprom is even showing a willingness to offer more contract flexibility.

With a plethora of new sources coming online from emerging suppliers like the US and Australia, and traditional LNG providers like Qatar looking to supply new markets, coupled with easily accessible and more affordable “floating storage and regasification unit” (FSRU) infrastructure, LNG is getting ever closer to becoming a global commodity, one that could not only supply natural gas to countries like Poland, but also to other states in Central & Eastern Europe (CEE), even those that are landlocked.

Interconnect, reverse-flow 

For countries like Poland or Lithuania—because of their LNG terminals—things are easier now. But for others, like Estonia, Bulgaria or Hungary, Slovakia, or Ukraine, diversification is not as easily addressed. In the wake of the gas shutoff crises in 2006 and 2009, EU member states in the CEE region have been urged by the European Commission to join up their gas markets via gas interconnectors that can provide reverse-flow capacity.

Moreover, the concept of the so-called North-South Corridor project, whose completion would mean the complete networking of the gas networks of the European member states along a north-south axis through Central Europe, would result in all of these countries being able to access the gas delivered via LNG terminals in both the north and south of the entire region. As part of its regional policy, the European Commission has named the North-South Corridor a “project of common interest.” 

Regional solidarity via the Three Seas Initiative

Bolstering those sentiments, 12 countries in the region have pledged to come together and embrace the so-called “Three Seas Initiative,” to improve infrastructure and trade and to develop better connections in transportation, digital communications and energy – including natural gas infrastructure—along a north-south axis.

One goal is a connecting the LNG terminal in Poland with a pending project in Croatia which plans to finish the construction of an LNG terminal off of the island of Krk in 2019. A project that has been in the works for nearly a decade, the good news is that earlier this year the project received a EUR 102 million grant towards construction of the import terminal, it has gained the support of Slovak transmission system operator Eustream, and preliminary underwater research and drilling activities began at the site at the end of August.

Increasing energy security in Europe

This September the European Parliament (EP) approved a “solidarity mechanism” whose purpose is to help member states deal with gas disruptions. Highlighting the risk of relying too much on one single route and/or supplier, and recalling the gas crises of 2006 and 2009, the measure strengthens security of supply rules and appears to be the latest in Brussels’ efforts in the past several years to bolster energy security.

Budapest LNG Summit: Get all the details!

All of these issues and more will be discussed at the Budapest LNG Summit, which happens on 16-17 October 2017 in Budapest, Hungary. A priority event in the context of Hungary's Visegrad 4 Presidency, the Budapest LNG Summit is a niche event focused on the up-and-coming LNG region: CEE.

The purpose of the LNG Summit is to create an exclusive, high-level forum for the region’s top leaders from 20 countries, enabling them to network, explore and consider the medium and long-term prospects for the LNG business in CEE. Its main focus is to connect regional CEE demand with the international supply chain, while also sharing insights and perspectives from the sector as well as discussing the region’s key LNG-related issues.

Top speakers covering all aspects of the natural gas business in CEE

In addition to the top management from regional oil and gas companies and infrastructure operators in CEE, and an opening speech from Hungary's National Development’s Minister of State for Energy, András Aradszki, you will be able to hear from the Vice President of Global Gas at Shell, CEO of Ukraine's Naftogaz, Head Economist at the International Energy Agency, Vice President of International Gas at ExxonMobil, Secretary General of the Gas Exporting Countries Forum, and the Senior Vice President of an American LNG exporter, just to name a few. There is also a respectable cadre of energy investors, analysts, diplomats, and consultants on our agenda. See the full list of speakers.

It's your last chance to book your place at the Budapest LNG Summit to get the latest project updates on infrastructure and facilities projects as well as a review of regional gas demand, investment and financing opportunities within our region and the latest on gas diplomacy.