Sunday

25th Sep 2016

Worst-hit EU states get least in post-gas crisis plan

  • The EU is to fund more gas pipelines to avoid another deep freeze when Russia turns off the tap (Photo: Naftogaz of Ukraine)

The European Commission on Wednesday (28 December) proposed investing €5 billion of unspent EU money in energy and broadband infrastructure projects, as a response to the recent gas crisis.

Out of the €5 billion, €3.5 billion were earmarked for new gas pipelines and electricity networks which would inter-connect member states, as well as for offshore wind projects and carbon capture facilities.

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"The recent events with Russia and Ukraine show how important it is to achieve a greater level of energy security. The gas crisis has clearly shown the vulnerability of the European Union and I think we should respond in a coordinated way," commission president Jose Manuel Barroso said, while calling on member states to adopt the proposals at the next EU summit on 19 March.

A look at the listed projects disclosed a preference for bigger and influent countries, while smaller countries such as Bulgaria and Slovakia, which were worst affected by the gas cuts, got only minimal sums: €20 million for a Bulgaria-Greece gas pipeline and €25 million for one connecting Slovakia with Hungary.

By contrast, Poland got €80 million for an own liquified gas terminal, €250 for carbon capture and storage facilities and €300 million shared with other countries for gas pipelines and offshore wind projects. Countries like France, Germany, Great Britain and Spain also got over €100 million each for regional gas and electricity projects.

Asked how why the worst affected Eastern European countries received so little, Mr Barroso replied that these countries did get "a lot," since most projects were transational.

"We shouldn't consider this plan as having as beneficiaries only the countries where the investment is taking place. If we have a real internal market working from East to West and from West to East, it will be possible, in case there will be a disruption due to external political or technical problems, for the others to come and help the country out," he argued.

However, he did concede that a certain "geographical balance" was needed in order to ensure the approval of the package by all member states who still have to greenlight the project list.

"It is not just about Eastern Europe, but Europe as a whole," he concluded.

The Czech Republic, currently chairing the rotating EU presidency and also affected by the Russian gas cuts, was listed with only €25 million for expanding its gas storage facilities.

Symbolic contribution to Nabucco

The Commission also earmarked €250 million for Nabucco, a politically sensitive project, since it would bypass Russia and deliver Caspian gas directly to European consumers.

Mr Barroso said the commission always supported this project as part of its energy diversification policy. The EU executive now gave its "contribution," but it was up to member states and private companies to follow with more substantial sums. The total cost of the project is estimated at roughly €8 billion.

The EU's €250 million would not be directly allocated to the construction of the pipeline, but would be used as a "risk-sharing facility" with the European Investment Bank in order to raise loans for the project at better rates than the current economic downturn allows.

"It's not a big proportion of what Nabucco is eventually going to cost, but symbolically it still matters that the EU decides to use part of its own budget for supporting Nabucco," Niklas Nilsson, an expert on EU energy security issues affiliated with Central Asia-Caucasus Institute in Stockholm told this website.

"Symbolically, the EU starts to realise that you need political decisions in order to accomplish these things. All pipelines in this region will be political pipelines."

Apart from the energy projects, the EU package also included €1 billion for expanding and upgrading high-speed internet in villages, with further €500 million earmarked for ecological projects in rural areas.

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