Essay Example on Baltic Energy the EU Gazprom Is Diversifying Away from Russia

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Baltic Energy the EU Gazprom Is Diversifying Away from Russia an Impossible Goal Since their accession to the EU in 2004 Estonia Latvia and Lithuania are still suffering from tighter energy markets and the dominance of Russian infrastructure As a resurgent power under the Putin presidency 1999 2008 the corresponding oil and gas boom was the foundation for Russia's economic revival and resurgent national pride Aside from the prospect of military action Russia poses a multi faceted threat to the Baltics often outlined under the term hybrid warfare a loosely defined concept in security circles that entails covert and deniable actions in Russia's efforts to contain and influence key areas such as Baltic energy infrastructure and domestic politics This piece will highlight key developments in EU backed policy shifts in Baltic energy security and its actions in breaking the dependence on Russian infrastructure and energy companies an often overlooked policy area in the geopolitical struggle for influence between the EU and Russia From now on nobody will dictate us the price for gas or buy our political will Lithuanian President Dalia Grybauskaitė 2014 Since their accession to the EU energy policy has been cited as a Baltic achilles heel causing widespread domestic concern at the dominance of the Russian interests since Gazprom became an investor in the three state energy companies Eesti Gas 37 Latvijas Gāze 34 and Lietuvos Dujos 37 



This dependence has resulted in high prices and a total dependence on Gazprom owned pipelines as well as ageing Russian delivery methods and energy infrastructure inherited by the countries after the fall of the Soviet Union Thus reform towards energy independence has been constrained by insufficient government resources and a Russian state controlled monopoly with international policymaking by the EU and it s member states being the only medium through which to achieve tangible change In the face of the current energy situation the Baltic States have shifted their alignment and objectives to EU policies and reducing their dependence on Russian energy via decoupling from the Integrated Power System IPS of Russia and Belarus and Russian pipelines On the 17th June 2009 eight heads of state and the European Commission provided a roadmap to integration through the Baltic Energy Market International Implementation Plan BEMIP This project has facilitated greater interconnectivity by granting funding for two major projects the balticonnector pipeline between Estonia and Finland and the Gas Interconnection Poland and Lithuania GIPL Alongside infrastructure projects funded by the EU the three countries have looked into initiatives to combat the risk of Moscow cutting off energy supplies which occurred in 1993 in response to Estonia s non residency permit laws directed primarily towards ethnic 



Russians Lithuania which consumes more gas than Estonia and Latvia has leased a floating gas storage vessel from the Norwegian shipping company Höegh LNG for ten years at a cost of 430 million euros and constructed the onshore infrastructure necessary to connect the floating terminal to Lithuania s gas network allowing Lithuania to import liquefied natural gas successfully eliminating the 100 per cent dependency on Russian infrastructure Alongside funding direct initiatives to decrease Russian dependence the EU has also played an indirect role in combating Gazprom s corporate influence with the market legislation the Third Energy Package passed in 2009 compelling member states to separate energy generation and supply from its transmission ultimately aiming to prevent companies who control energy infrastructure forming monopolies This policy of unbundling was successfully completed in Estonia and Lithuania in 2014 although Gazprom fought unbundling in Lithuania the company acquiesced after arbitration subsequently selling its shares in the Lithuanian state gas company in 2014 and in the Estonian state gas company in 2016 Gazprom ostensibly adhered to the legal requirements set out by the Third Energy Package although the potential of added competition and lack of control resulted in diminished returns for 



Gazprom In April 2017 Latvian gas company Latvias Gāze despite influence by Gazprom had its gas market liberalised with Latvias Gāze expected to be fully unbundled by early 2018 However Gazprom still holds a significant stake in the company and in August 2016 it signalled that it is reconsidering selling its shares Thus Gazprom s ability to affect Baltic gas policy and development has been reduced through these new polices unable to remain dominant in legal measures encouraging increased transparency and competition Therefore the successful launch of roadmap programmes such as BEMIP and Third Energy Package clearly highlight a political will from the EU and its member states to take initiative against Russian energy control As of 2018 these policies have proved successful in reducing the stranglehold of Gazprom on Baltic energy markets However due to the ongoing nature of these projects and continuing Russian resistance more progress needs to be made in following Lithuania s cost effective example of leasing and building infrastructure as well as increased measures targeting transparency corruption and completing the unbundling process


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