External dimension of the EEP
Filip Černoch
cernoch@mail.muni.cz
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Energy ´from abroad´
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• To secure stable and reliable supplies of energy at affordable prices.
• To improve relationship between consuming countries, producers and tranzit countries.
• To strenghten the negotiating position of the EU by ´speaking with one voice´.
• Limited supranacionalisation – energy security as an issue of high politics. Issues outside of
the reach of the EU. Weak position of EC.
• Not clearly defined area – only vague and rather supportive powers of the European
Commission.
• Increasing importance due to the disintegration of Soviet Union, accession of new MS,
Russia-Ukraine disputes… .
Powers and tools of the EC
4
• Support of diversification.
• Diversification of fuels.
• Diversification of suppliers.
• Diversification of transit routes.
• Strategic reserves of oil and gas.
• Export of energy acquis communautaire via network of bilateral, multilateral
and global treaties covering (to some extent) energy issues.
• IEM.
Coal security and supplies
5
• 17,5% of the total primary energy supply. From 2002 slowly decreasing with return to
the growth from 2009.
• Main source for electricity.
• In 2013 65% of total consumption of hard coal imported from outside of the EU.
Brown coal produced and consumed locally.
• Still substantial indigenous production – security benefit.
• Environmental problems (CCS).
• EU focuses on environmental impacts and state aid.
• = not a security issue.
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Nuclear security and supplies
7
• 27% of the total electricity generated in the EU. 56 NPPs (131 reactors) in 14 MS.
• Nuclear energy not a security problem:
• Diversification of supplies.
• Mining (1/2 half of the production from Canada, Australia, Niger, Kazakhstan, Russia,
Namibia) and yellow cake production.
• Enrichment (to raise the proportion of the uranium-235 isotope). Countries with Abomb
technology.
• Fabrication.
• High energy content of fuel – Temelin (2x1055MW) – about 4m2/y.
• Megatons to Megawatts.
Oil security and supplies
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• 32% of the total primary energy supply.
• Indigenous production of crude has been falling faster the decline in consumption.
(Norway?).
• = oil considered as a security (dependency on exporting countries) problem.
• Also problem of competitiveness – European refineries face substantial restructuring
(low margins and low utilisation rates) due to the decreasing regional demand an
increased competition from Middle East, Asia, USA.
• 15 of them closed between 2008-2014 – 8% decrease in processing capacity of the
EU.
• Inreasing dependence on import of oil products.
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Oil security and supplies
12
• Difficult to replace – mainly in transport and petrochemistry.
• Support of usage of RES instead of oil.
• Biofuels – Energy and climate package – 10% of biofuels (RES) in transport in every MS by
2020. Later on strenghtened.
• RES electricity in energy sector.
Oil security and supplies
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Gas security and supplies
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• 23,9% of the total primary energy supply.
• Peak in demand in 2010, now plateaued (slightly decreasing).
• Dependence on fixed pipelines – low flexibility.
• Ensuring security of gas supply and limiting import dependency a priority = a high
security concerns.
• A growing competition due to LNG, higher exposure to price differentials between
Asia, North America and the EU.
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Gas security and supplies
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• A high security concerns.
• In power generation could be replaced by RES or coal or nuclear.
• Indigenous production? (still substantial reserves in the North Sea) + unconventional
sources (shale gas).
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Unconventional gas
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• Abundant reserves – in the Netherlands, UK, Denmark, Romania, Poland, France,
Germany, Bulgaria, Sweden, Spain.
• Europe (470 tcf) vs. USA (1685 tcf).
• Environmental concerns.
• Gas itself is clean, but the exploration could be a problem.
• Consumption of water – 280 000hl/one dril. 0,5 – 2 % of this water consists of
drilling chemicals.
• 2-4 ha/one drilling pad (up to 30 drills) 3-6km between pads.
• Trafic – one dril = 700-2000 trucks (one every 4 min. during construction).
• Earthquakes (seismic activity).
Powers and tools
21
• Support of diversification.
• Diversification of fuels.
• Diversification of suppliers.
• Diversification of transit routes.
• Strategic reserves of oil and gas.
• Export of energy acquis communautaire via network of bilateral, multilateral and global
treaties covering (to some extent) energy.
• IEM.
Pipeline gas and LNG
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LNG
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• In 2013 19 LNG terminals. Since 2008 new terminals in France, UK, the Netherlands
and Italy. Three new commissioned (Lithuania, Poland – NS interconnection, France).
Financial support from the EU funds.
• TPA applied.
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Powers and tools
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• Support of diversification
• Diversification of fuels
• Diversification of suppliers
• Diversification of transit routes
• Strategic reserves of oil and gas
• Export of energy acquis communautaire via network of bilateral, multilateral and global
treaties covering (to some extent) energy
• IEM
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Russia-Ukraine gas crisis 2009
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• 1.1.2009 Russian exports to Ukraine cut off, problems in 16 EU MS and Moldova for
2 weeks (7.-20.1.2009). Part of the Balkans in a humanitarian emergency, economic
damages.
• 15% of EU supplies via the Brotherhood pipeline.
• The missing 5bcm could be replaced by supplies in the EU gas market (storages in
Germany, Austria and Italy), but there were no interconnections.
• Wake up call for the EU, investments to reverse flows, storage capacities, debate
about new import pipelines.
Nord Stream
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• Nord Stream (2 lines of 55
bcm/y) is not restricted by
TPA but both OPAL (50 %
of its 35 bcm/y) and NEL
(35 % of its 20 bcm/y) are.
• Supported by the EU (just
fraction of costs).
Powers and tools
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• Support of diversification
• Diversification of fuels
• Diversification of suppliers
• Diversification of transit routes
• Strategic reserves of oil and gas
• Export of energy acquis communautaire via network of bilateral, multilateral and global
treaties covering (to some extent) energy.
• IEM.
Activities of the commission - reserves
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• Strategic reserves of crude oil and petroleum products – Directive 2009/119/EC –
MS are obliged to ensure a total level of oil stocks corresponding to the 90 days of
average daily net imports or to the 61 days of average daily inland consumption,
whichever of the two quantities is bigger.
• Regulation No 994/2010 concerning measures to safeguard security of gas supply.
• Resolves the situation in case when the single largest gas infrastructure of country
fails, which is the so called N-1 scenario. In such case, the regulation obliges the
MS to ensure the supply for protected customers (mostly households +
hospitals…).
Powers and tools
32
• Support of diversification.
• Diversification of fuels.
• Diversification of suppliers.
• Diversification of transit routes.
• Strategic reserves of oil and gas.
• Export of energy acquis communautaire via network of bilateral, multilateral
and global treaties covering (to some extent) energy.
• IEM.
Instruments of the external dimension of the EU energy policy
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Instrument Partners
Bilateral cooperation
Energy dialogue
Brazil (since 2007), China (since 2005), India (since 2004), Iraq (since 2010),
Norway (since 2005), Russia (since 2000), The South African Republic (since
2008), Ukraine (since 2005), USA (since 2006)
The bilateral agreements of different sorts treating the economic
cooperation in total, including the power industry – for example
Partnership and Cooperation Action (PCA), Free Trade Agreement
(FTA), Stabilization and Association Agreements.
EU economic partners across the world
PCA agreements were signed by the majority of CIS countries and
represented the foundational element of the Deep and Comprehensive Free
Trade Area Agreements, that is, of the instrument set by the Eastern
Partnership
The memorandums of understanding associated with cooperation in
the field of power industry (MoU)
EU partners in the field of power industry, including Ukraine and the states
from the Caspian Region
The memorandums represented the first level of the intensified energy
relations
Instruments of the external dimension of the EU energy
policy
34
Multilateral cooperation
Energy Community
EU closest neighbors
Currently, the membership consists of the Balkan states, Ukraine and Moldavia
The observing status is held by Turkey, Norway a Georgia
European Neighborhood and Partnership Instrument (ENPI) 17 neighboring states
Energy Charter Treaty Oil producers assembled under the OPEC
Cooperation with the Gulf Cooperation Council
Baku Initiative
(INOGATE, Traceca)
EU Assistance Program for Turkey and CIS members states (Russia is the
observer)
Black Sea Regional Energy Centre (BSREC) 11 states from the Black Sea Region
Caspian Development Corporation (CDC) Companies from the Caspian Region
Union for the Mediterranean, Barcelona Process
16 states located along the Mediterranean coastline in the North Africa, Middle
East and Balkan
Instruments of the external dimension of the EU energy
policy
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Global cooperation
Energy Charter Treaty
Signed by 51 countries worldwide
In reality, a vast number of countries active in the energy market remained out
of this structure (for example, Norway, Australia did not ratify the document,
Russia withdrew in 2009)
Kyoto Protocol Signed and ratified in total by 191 countries worldwide, excluding the USA
International Energy Forum (IEF)
Includes the states which represent approximately 90% of the world oil and gas
demand and offer
Members are the IEA and OPEC states, China, Russia
G8 and G20 8 and 20 richest countries in the world
Export of legal framework
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• Energy Charter
• EU, CIS countries (without RF), central Asian states, Azerbaian, Georgie, Turkey.
• International agreement creating framework for cross-border cooperation in the
energy. Covers trade, transit, investments (Khodorkovsky´s Yukos tax evasions),
energy efficiency. Legally binding with dispute resolution mechanisms.
• 1991 Energy Charter declaration.
• 1994 legally binding Energy Charter Treaty (plus Environmental protocol).
Building strongly on GATT and WTO rules. 51 parties.
Export of legal framework
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• Energy Community (2006)
• EU, Albania, BIH, FYROM, Montenegro, Serbia, Kosovo. Moldova, Ukraine,
Turkey and Norway as observers.
• Extending the (energy) acquis of the EU to countries of SEE. Common
regulatory framework in energy (security of supply, energy efficiency, RES, third
liberalisation package), environment and competition.
• Problems with opening of members to competition, with subsidies, unstable
investment climate, insufficient measures to protect environments, state
regulation of prices…
Powers and tools
• Support of diversification
• Diversification of fuels
• Diversification of suppliers
• Diversification of transit routes
• Strategic reserves of oil and gas
• Export of energy acquis communautaire
• Network of bilateral, multilateral and global treaties covering (to some extent) energy
• IEM
External dimension and internal market
• EC vs. Gazprom.
• September 2011 EU antitrust officials made unannounced inspections of the energy
companies in 10 CEE MS.
• September 2012 – EC opened formal proceedings against Gazprom for allegedly
violating EU competition rules (abusing its dominant position in CEE´s gas supply
markets).
• Three potentially anticompetitive practices:
• Market partitioning (destination clauses).
• Barriers to supply diversification (breaching of TPA principle).
• Unfair pricing (long-term take-or-pay contracts, oil indexation).
Summary
• In external energy policy the role of the EU is feeble.
• Some competences provided by Lisbon treaty.
• No tradition of MS to cooperate when speaking with outside suppliers. Only soft
powers of EU here.
• Responsibility still on MS (their companies).
• Very turbulent area with some demand for „speaking with one voice“ (D. Tusk –
Energy union).
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Sources
• IEA (2014): Energy Policies of IEA Countries – The European Union.