Secure gas supplies will empower Balkan integration
Energy projects in the Western Balkans have the potential to act as an important catalyst for regional integration – but also, if mishandled, to reverse positive trends.
By Dr. Theodoros Tsakiris and Professor Kostas Ifantis
After more than a decade of wars and structural volatility the prospect of European integration offers an unprecedented degree of political stability to the Western Balkans. Europe is now the principal security guarantor in the region, providing for the bulk of police and peacekeeping forces in Bosnia and Herzegovina and Kosovo.
But while the European presence, and equally importantly, the European prospect, play a critical role in reducing the potential for new conflicts, regional gas geopolitics, and in particular the perceived antagonism between the Nabucco and South Stream projects, are factors threatening to reverse this positive trend.
Given the rising importance of the area as the principal transit corridor for the export of Caspian and Middle East natural gas to Europe, it would be unfortunate if such a zero-sum game mentality again characterized the region’s geopolitics.
These same projects could also constitute a catalyst for regional integration if a series of small-scale interconnectors were constructed so as to create the necessary conditions for the reverse flow of natural gas throughout the region.
Such a development would constitute a major step forward in integrating energy systems and markets in the Western Balkans, diversifying regional import sources and routes while promoting the penetration of natural gas in the region’s energy mix. The Western Balkan states face two intertwined energy challenges. The security of gas supply is pertinent to their resolution.
Too dependent on coal
Today, the region is too dependent on oil and coal in terms of its Total Primary Energy Supply, TPES, in particular its electricity generation. Contrary to average EU energy consumption patterns, which show a steady reduction in the use of petroleum and coal/lignite at the expense of natural gas, nuclear energy and renewables, the Western Balkans is moving in the opposite direction.
Since 2000, consumption of petroleum and petroleum products has risen by 7 per cent in merely eight years, accounting for 35.5 per cent of TPES in 2007 compared to 28.4 per cent in 2000. Similarly, the utilization of low-quality hard coal and lignite, which dominate the region’s electricity generation mix as well as other energy demand sectors, such as household and industrial consumption, continues to be more than double the EU average of 17 per cent.
The Western Balkans is the only European region in which coal still occupies a higher share of TPES than oil, a condition that has changed everywhere else in Europe since the early 1960s, when massive imports of Middle Eastern oil ended the former dependence on domestic coal. The region has still to make the transition to a non-lignite based economy, substituting its lignite and petroleum sources with natural gas.
Nowhere is the negative effect of the over-reliance on coal more evident than in the electricity sector. In Serbia, which accounts for almost 40 per cent of region’s demand, coal/lignite accounts for over 60 per cent of production. Coal completely dominates electricity generation mix in Kosovo – 100 per cent – and almost completely dominates FYROM – 80 per cent. Coal also accounts for 20 per cent of Croatia’s and Montenegro’s electricity supplies and almost 60 per cent of Bosnia’s electricity generation.
Natural gas, which today only occupies a small portion of the region’s final energy consumption (around 13 per cent), needs to grow exponentially in order to limit the over-utilization of coal in electricity generation and industrial uses.
Unfortunately, apart from Croatia, which produces 60 per cent of its gas needs, only Serbia has a limited amount of indigenous reserves, which account for less than 7 per cent of consumption. Bosnia and FYROM only consume gas from Russia, transited via Serbia. Albania consumes only negligible quantities of natural gas, less than 0.6 per cent of TPES, which it produces itself. Kosovo and Montenegro use no natural gas at all.
Start by diversifying imports
In terms of imports, the region is almost totally dependent on Russian exports shipped to Croatia, Serbia and Bosnia via a pipeline from Hungary.
The dangers of over-dependence on a single supply source via a single route became evident in the region during the largest energy crisis that Europe has faced since the 1970s. From January 7-20, 2009, all consumers of Russian gas in the area suffered unprecedented disruption due to the breakdown in the Russian-Ukrainian energy relationship, which resulted in Moscow embargoing all gas exports to Ukraine on January 1.
Until January 5, Ukraine did not interrupt the flow of gas to Europe but then Kiev decided to compensate for the losses of its own Russian imports by tapping into gas heading for Europe. On January 6, only 10 per cent of normal gas exports were flowing via the main pipeline entry point to Slovakia that thereafter flowed via western Hungary to Slovenia and Croatia.
By the next day all commercial exports were severed, leaving the Western Balkans with no gas imports. Of the affected states, only Croatia was able to cope by immediately increasing its own production while also tapping into exports from Germany’s strategic gas storage facilities, which were transited to Croatia via Slovenia.
Serbia resorted to its own limited gas storage capacity – but that had a negligible effect in the country’s ability to cope with the crisis. There was no shipment of Croatian gas to Serbia and in extension to Bosnia, where the network extended only to the Serbian-held region of the republic. Bosnia, the most seriously affected state, had to massively utilize wood and charcoal for heating during the peak of winter.
It was not until January 16 that relief arrived in the form of Hungarian gas, released from the country’s sufficient strategic stocks, which made its way to Sarajevo and eastern parts of Bosnia. Apart from that, Serbia had to resort to massive utilization of lignite and fuel oil to compensate for most of the losses.
The absence of any gas interconnectors from Romania aggravated the situation, because Romania is the only other Balkan state with sufficient gas storage and limited dependency on imports (around 30 per cent of consumption) that could shield the region’s economies against a short-term disruption in supplies.
Interestingly, neither Serbia nor Croatia blamed Russia for the crisis. On the contrary, both governments concluded that they needed to enhance, not reduce, their relationships with Russia. In Croatia’s case this meant joining in the South Stream gas pipeline project, which aspires to export up to 63 billion cubic meters of Russian gas annually to South Eastern and Central Europe, avoiding the problematic Ukrainian gas transit corridor.
Pipeline Geopolitics – The ‘New Great Game’
Although Southeast Europe as a whole is considered the most critical transit region for the diversification of EU natural gas imports away from Russia and the problematic Ukrainian gas transit corridor, the Western Balkans would have remained a mere sidekick of this “New Great Game” were it not for Gazprom’s South Stream project.
Neither Nabucco nor ITGI – the projects to connect Caspian Sea natural gas to Europe via Turkey – cross the Western Balkans. Neither Nabucco nor ITGI considered extending interconnectors linking their nominal combined transit capacity of 42 bcm/y to any of the Western Balkan states in close proximity. Nor was there any suggestion by the respective consortia developing these two major infrastructure projects to interlink the ITGI with Albania or FYROM, or Nabucco with Serbia or Croatia.
Apart from South Stream and a planned reverse flow gas interconnector of 2 bcm capacity between Serbia and Bulgaria, announced on March 2010, the only inter-regional projects that appeared to increase the level of market integration within the Western Balkans area are the Western Balkans Gas Ring Project and the Trans-Adriatic & Ionian-Adriatic Pipeline.
The Greek and Turkish Public Natural Gas Companies, DEPA, and Botas launched the now moribund idea for the Western Balkans Gas Ring Project in 2003. The plan was to construct several small to medium capacity natural gas interconnectors between the whole of former Yugoslavia, which could be fed with Caspian Sea gas via the ITGI.
Early in 2003 DEPA, Botas and their counterparts from all the former Yugoslav states, and Albania, signed a Memorandum of Understanding. But the project never moved forward. It became evident that there was not enough demand in the region and there was uncertainty over the availability of Caspian gas, an enigma that still bedevils both Nabucco and ITGI. Finally, both DEPA and Botas lost interest as a result of their participation in much more financially viable and nationally advantageous projects, such as ITGI and, or, Nabucco.
The Trans-Adriatic and Ionian-Adriatic Pipeline
The second alternative that appeared to hold the promise of genuine market integration was the Trans Adriatic Pipeline, TAP, system and its eventual extension in the form of the Ionian-Adriatic Pipeline, IAP. The TAP, owned on a coequal basis by the Swiss-based utility company EGL and Norway’s Statoil, aspires to export around 10 bcm/y of Caspian and Iranian gas to Italy and Switzerland via Turkey, Greece, and Albania.
The 520km line aspires to utilize the Turkish pipeline system to Greece, which is already in operation and has a final throughput capacity of 11.6 bcm/y, to extend a private pipeline system crossing Greece (186km), Albania (200km) the Straits of Otranto (115km) and Italy (19km).
The cost of the line is estimated at around 1.2 billion euro. The TAP is thereafter projected to extend along the Adriatic coast from Albania to Montenegro, Croatia and Slovenia as an updated edition of the 2003 DEPA-Botas Western Balkan Gas Ring project. But the TAP’s additional vision, to expand through the Western Balkan markets as the Ionian-Adriatic Pipeline project, also lost steam following Croatia’s plans for a Liquified Natural Gas terminal, LNG, on Krk.
In any case, the IAP would not have been implemented before 2015-2016 at the earliest, which is before the 10 bcm/y capacity TAP line would transit Iranian and Azeri gas to Italy after crossing Turkey, Greece and Albania. The TAP’s realization is anyways doubtful since its only secured gas supply contract, to the chagrin of the US, comes from Iran; it has no regulatory transit arrangements in place with neither Turkey nor Greece; it is directly antagonistic to both the Nabucco and ITGI projects for access to Azerbaijan’s reserves, the only mid-term available source of non-Russian gas for EU markets.
In reality, there was never a real chance that the TAP would strengthen regional market integration in the Western Balkans.
South Stream, by merit of the existing Russian gas exports, which will be diverted from the Ukrainian Corridor, does not face any problems regarding the provision of necessary gas volumes at least until it completes its first 31 bcm/y phase.
With Italy’s ENI and France’s EDF on board, South Stream is developing as a truly Pan-European project with more EU member states participating in it than the ITGI or Nabucco projects. By its extension to Serbia, Slovenia and potentially Croatia, South Stream is the only inter-regional project that significantly increases market liberalization and integration between the Western Balkan states. However, its implementation may not prove enough to guarantee the security of regional supplies.
The importance of interconnectors
The construction of a 10bcm/y capacity LNG terminal in Krk, which will be connected to Hungary and potentially Austria via the Interconnector Croatia-Hungary trunk line, ICH, is the region’s only new investment project in the natural gas sector that has entered implementation phase.
The European Energy Programme for Recovery has earmarked the line, expected to cost around 60 million euro, for a grant of 20 million euro and construction is expected to begin in 2010. Before the Krk facility is commissioned, the trunk line is expected to run on Croatian supplies. The Krk LNG terminal is expected to cost up to 1 billion euro and be completed by 2011-2012 at the earliest.
The absence of gas interconnections is detrimental to the goals of market integration and import diversification. In case of another crisis, Serbia could not benefit from the increase in Croatian gas production or from increased natural gas imports from Austria or from the future LNG station in Krk unless there is a Croat-Serbian gas interconnector also extending into Bosnia.
There has been no investment in the region’s natural gas infrastructure for over 30 years. As already mentioned the only new pipeline under construction is the interconnector from Croatia to Hungary that could link into the planned Krk LNG facility, whose primary if not exclusive purpose is to increase Hungarian import diversification away from Russia.
Moreover, MOL, Hungary’s oil and gas company, which owns around 47 per cent of its Croatian equivalent, INA, will make sure that the ICH works with that function in mind, as a means of national import diversification – not as a means of integrating natural gas markets in the Western Balkans.
Plinacro, Croatia’s natural gas transmission system operator, has plans to extend its network to Serbia, Slovenia and even Montenegro. But given MOL’s strategic presence in INA, such a pipeline expansion will most likely have to wait the commissioning of the ICH.
The ICH, though, would also need to operate as a source of import diversification for the rest of the region. In the same spirit Serbia could also connect to the Nabucco and, or, the ITGI projects via the construction of a gas interconnector with Bulgaria, which participates in both EU priority projects.
If such a by-flow network were to emerge, the Western Balkan states could be linked to more than three sources of gas supply: Russian gas via South Stream, non-Russian LNG via the ICH. and non-Russian LNG and pipe gas via a future Interconnector between Bulgaria and Serbia, or between Greece and Serbia via FYROM. Such a system would minimize the risks of a future interruption thereby encouraging the rapid penetration of natural gas in the region’s energy mix.
Dr. Theodore Tsakiris, an energy expert, and Kostas Ifantis, Associate Professor at the University of Athens, are members of the EKEM-CSIS Task Force ‘Transforming the Balkans’.
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I wonder if this is why America did not have Oil which is called Black gold as a Gold Standard during the Days of the USSR, because it would have allowed the USSR to have a Reserve for its Printed Currency.
We know that the Metal Gold, is kept in vaults, and the Oil or Black Gold is kept in an underground safe.
Perhaps they were waiting for Mikhail Khodorkovsky and others to control much of the Oil and Gas industry before America went to the Oil Standard.
If others do not want to by or sell in Russian currency, then perhaps the Barter System can be used as a type of Reserve Currency for Russia’s trading partners.
Perhaps Ukraine should default on all its loans, and borrow from Russian Banks that are backed up Natural Resources at a fair interest rate.
There would need to be a Truth and Reconciliation Process with immunity for those who confess to purge Corruption in Business Practices.
There would also need to be proper Economic Policies, but I cannot say what they are, but if you want to be successful, then COPY successful People.
I want to say that I know very little on the subjects of Economics, Banking, and Finance, but I do have some thoughts on these matters.
We know that the Gold Standard was used for Banking as a security for the printed Bank Notes, and perhaps this is what America was planning with their Jewish Puppet Khodorkovsky.
We know that Oil is called Black Gold, and possibly the Entire Known Oil Reserves of a country can be used to back up the value of their Printed Currency.
I think that the only country that could go to the Oil Standard is Russia, because America might consider invading and occupying Muslim Countries that tried it.
If Russia did go to the Oil Standard, then it could change the attitudes some Oil Producing countries in the Middle East toward Russia.
Again, I want to say that it is only a suggestion from a person who is a novice as regards to Economics, Banking, and Finance, and that is why it should only be done if it is recommended by Impartial Experts.
The only problem with Experts is the fact they many Experts may have vested interests, rather than examining the suggestion only on its Merits.
I think that Ukraine should threaten to default on all IMF, World Bank, and EU Loans if the Nazis of Europe do not give the SAA money in a reasonable time.
After the Nazis of Europe give the SAA money, then Ukraine should Blackmail the Nazis of Europe for something else, until the Nazis of Europe cannot give anything more to Ukraine.
After that, Ukraine should default on all IMF, World Bank, and EU loans and borrow money from Russia.
An International Summit Conference on the Topic of how Business is Corrupt will help Business Investment to Ukraine.
This is because Investors will be Confident that Corruption has been cleaned up like it has in Russia, and Ukraine will have Foreign Investment and Full Employment.
It is vital to make a copy of this comment and send it to as many people that you can, and they should send it to others.
I want to say that there is nothing racist in this comment, even though the usual suspects will try to label it like that.
Racism is a Fact of life, and it is a topic that needs to be discussed in a proper manner in any Democracy that values Freedom of Speech, and seek solutions to problems.
This comment is a discussion on how others could use Racism to further their evil goals, and it is only by knowledge that we can be ready to handle matters sensibly and correctly.
There could be some People who think that certain People have been Bribed or Blackmailed to say that the Kosovo Albanians are Pure.
We know this because Anglo-America and the Nazis of Europe under Anglo-American Supervision will use Wikileaks to publish lies for them when it needs those lies published from a possible credible source.
People know that Anglo-America will Blackmail whoever they need to say what America wants to be said, or to refrain from saying what Anglo-America does not want said.
I want to say that much of the Cables that were given to Wikileaks are the correct wording; however, a few lies could have been slipped in if Wikileaks was a CIA front to begin with.
It needs to be said that even if Wikileaks is pure, this of itself does not mean that everything that is dumped there and published is true.
America just does not care what the Cables say, because Puppets are Puppets; they will be ordered to continue to be Puppets, and they will continue to obey orders.
If the Wikileaks Cables can publish lies to divide Anglo-America’s enemies, then it is a definite asset to Anglo-America.
Wikileaks has conveniently been given Data on Secret Swiss Bank Accounts, which could even be false Data on Secret Swiss Bank Accounts, either from an honest source, or from a CIA approved source.
If the Kosovo Albanians are said to be Criminals and Terrorists, by Europeans, then many People think that the European Union should impose a fair Autonomy on the Kosovo Albanians.
If the Kosovo Albanians are said to be Pure, then many People think that they should immediately start Proper Negotiations in order to Prove that Purity.
It could be that with all that Purity, the Serbian Citizens of Albanian Ethnicity, will be able to Negotiate a Fair Autonomy to prove to the entire World that different Races can live together in the same Country.
There has been many conversations and in many Countries concerning the role of Jews in their Countries.
We have how seen how Prominent Jews like Boris Berezovsky have been accused of stealing Russia’s money and fleeing to Britain and other corrupt Countries that will not extradite them, to answer the charges against them.
It is interesting how Transparency International says that Russia is a very corrupt place to do Business, and yet somehow Mikhail Khodorkovsky, who became the Richest Man in Russia, is Supposedly Pure.
We all know that a Corrupt Business Environment is like a septic tank where the solids will always rise to the top.
The Media and much of the Stolen Wealth in Russia is mainly Foreign Owned, even though it is owned by Russian Jews.
It is just like saying that Kosovo Albanians are Serbian Citizens whose first loyalties are to Serbia rather than to Albania.
We know that Hitler was unjust to the Jews, because the Jews of Germany did not have, and could not have any loyalty to the Modern Nation of Israel, because the Modern Nation of Israel was only created after the Second World War.
Today, it could be true that the loyalty of some Jews is only to Israel rather than to the country that they are Citizens of.
Many People blame the Jews for stealing Russia’s Wealth; and they say that Jews are Foreigners who are not loyal to the country of their Citizenship, but are working for a Foreign Country, Israel, at the Expense of the Country of their Citizenship.
If the Kosovo Albanians are said to be Criminals and Terrorists, by Europeans, then many People think that the European Union should impose a fair Autonomy on the Kosovo Albanians.
If the Kosovo Albanians are said to be Pure, then many People think that they should start Proper Negotiations in order to Prove that Purity.
It could be that with all that Purity, the Serbian Citizens of Albanian Ethnicity, will be able to Negotiate a Fair Autonomy to prove to the entire World that different Races can live together in the same Country.
Even though some may think that these matters are not what the topic is saying, it does not matter, because most things are dependent on other thing, and this is a vital matter.
Russia needs to prepare to Fight the Good Fight, and to shy away, because Victory is close for those who want to live.
I have given you the Strategies, and you need to have a Committee to refine, because you have enemies, even if you are m\not intelligent enough to understand it at this stage.
We all know that Britain and America have been great allies, but we need to be reminded that China and Albania were publicly great allies at one time.
All of us who have intelligence above Moron Status know that, with the exception of a few hermits, most people should only believe approximately 50% of what they see, hear, or read in any year.
Officially, China and Albania are not allies anymore, even though they are not enemies.
It may or may not be true that China and the Albanians are allies.
It is not unreasonable to consider the possiblity that years ago, Britain, America, Israel, China, and Albania schemed a scheme to take over the Southern Europe using Camp Bondsteel as their base.
I know that there was the bombing of the Chinese Embassy during the War to steal Kosovo, but that Ambassador and his staff may have been riffraff that were promoted to those jobs, because they were always going to die.
It could be that the Chinese did not know or approve of it, but the more intelligent White Anglo-Saxons knew that it would create a better effect, and that China would shut up because it was committed to the Conspiracy.
We now know why the White Northern European Master Races do not want to implement the SAA Agreement with the Southern European Serbs who the English and the Dutch call the Serbs and other darker coloured Europeans Blacks and Kaffirs in private company.
The White Northern European Master Races want to create an Alliance of Whites Only, because money is scarce, and they know that a Military Alliance of Northern White Europe, with America, China, and Israel is what they want to join.
This Military Alliance will try to deny Russia access to the Mediterranean Sea, and that is why Camp Bondsteel is there.
Continental Europe can see this coming, and so they will try to delay it for as long as possible.
They will perform the Fullness of the Economic Genocide on America by not buying ANY goods or services from America.
With China, they can Default on all loans, and this will delay the Chinese and American Conspiratorial Plans.
We all know, or we all should know, that whoever makes a Deal with America will always be tricked.
America and the Jews have never been good for Continental Europe, as European History shows.
America joined Britain in World War 1 to make money off of Europe’s misery, and they imposed the Corrupt and Unjust Treaty of Versailles that ensures WW 2 for Europe.
They made the Soviet Union occupy Western Europe, as they did not let their Western European Puppets liberate Eastern Europe, and the threatened the Soviet Leader with a Nuremberg Trial if they would not occupy Eastern Europe.
They have made the Russians cover up this fact, because they know that the Russians are not intelligent enough to confess that most people can be Threatened and Blackmailed.
If the Russians refuse to be cowards any longer, then they will have an International Summit on the Role of Jews given the Albanian Mentality.
The International Summit Conference in Moscow should discuss Boris Berezovsky and other Jews, like that Convicted Criminal, the Jew, Mikhail Khodorkovsky.
The Media and much of the Stolen Wealth in Russia is mainly Foreign Owned, even though Russian Jews own it.
We all know that a Corrupt Business Environment is like a septic tank where the solids will always rise to the top; and, those solids in Russia are the Jewish Oligarchs.
The Jews is he is SMART, will no longer steal and betray the County of his Citizenship, but he will create FULL EMPLOYMENT, because that is a FINAL SOLUTION.
The Media and much of the Stolen Wealth in Russia is mainly Foreign Owned, even though it is owned by Russian Jews.
It is just like saying that Kosovo Albanians are Serbian Citizens whose first loyalties are to Serbia rather than to Albania.
We know that Hitler was unjust to the Jews, because the Jews of Germany did not have, and could not have any loyalty to the Modern Nation of Israel, because the Modern Nation of Israel was only created after the Second World War.
Today, it could be true that the loyalty of some Jews is only to Israel rather than to the country that they are Citizens of.
Many People blame the Jews for stealing Russia’s Wealth; and they say that Jews are Foreigners who are not loyal to the country of their Citizenship, but are working for a Foreign Country, Israel, at the Expense of the Country of their Citizenship.
I know that the Anglo-American Politicians have been reading my comments, and I am Certain that they have gleaned anything of Use.
Logic strongly tells me that Britain and America have been Blackmailing their Puppets who Lust For MONEY to be first Secretly Filmed in Acts of Paedophilia or Bestiality.
Many Serbs have long wondered if Boris Tadic and other Leading Puppet Politicians in Serbia, have been Secretly Filmed in Acts of Paedophilia, or Bestiality, before receiving Money from Britain and America.
There are many People who think that the People who attended the Secret Nazi Summit made a pact between each other by being Secretly Filmed in Acts of Paedophilia or Bestiality to prove their Nazi Credentials.
China and Russia must declare that Kosovo will never become independent regardless of what happens even to all non-Russian Europe.
It should not surprise us if the English, the Dutch, and Serbia Politicians pray to the invisible Satan the Devil, and to his invisible demons to torture General Ratko Mladic in the invisible realm to surrender, or to make it falsely look like he was captured because of the work of good Detectives.
If the Kosovo Albanians are said to be Criminals and Terrorists, by Europeans, then many People think that the European Union should impose a fair Autonomy on the Kosovo Albanians.
If the Kosovo Albanians are said to be Pure, then many People think that they should start Proper Negotiations in order to Prove that Purity.
It could be that with all that Purity, the Serbian Citizens of Albanian Ethnicity, will be able to Negotiate a Fair Autonomy to prove to the entire World that different Races can live together in the same Country.