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“Integrating” energy sector: improving Baltic’s energy security with the EU’s grants
In the second part of 2015, a first
step in the integration of the gas markets of the Baltic Sea region within the
EU was made: Poland and the Baltic States agreed to build the pipeline known as
GIPL connecting Poland and Lithuania.
A year after came the second step:
the signature of the agreement for the construction of the gas pipeline linking
Finland and Estonia: the Balticconnector, which will, for
the first time, link the gas markets of Finland and Estonia.
This “truly unifying project” with
exceptional benefits is supported by the EU budget with a grant of € 187
million. The project will be finalized in 2020 and will unite the Eastern
Baltic Sea region with the rest of the EU energy market.
The Balticconnector
As part of the EU's Energy Union strategy, the
EU is committed to building missing energy infrastructure links and ensuring
that every Member State has access to at least three different sources of gas.
Integrating the Baltic Sea region with the rest of the EU is a priority for the
Commission.\
The Balticconnector pipeline will
consist of three sections: 22 km Finnish onshore, 80 km offshore and 50 km
Estonian onshore. It enables the transport of 7.2 million cubic metres of gas
per day with flows running in both directions. Alongside the Gas
Interconnector Poland–Lithuania (GIPL), it will contribute to
increasing energy security and solidarity in the region.
Currently, Finland is largely
dependent on gas flows from a single supplier. And until recently, the three
Baltic States also had to rely on gas imports from a single gas source. When
completed, the Balticconnector and the gas pipeline between Poland and
Lithuania, will allow Finland and the Baltic States to diversify their gas
sources and routes, safeguarding them against possible supply disruptions in
the future.
Leaders’ opinion
European Commission President
Jean-Claude Juncker said, the “connector” was more than “simply linking the gas
systems of two countries: it brings people and states in the region closer
together”. It is part of the EU energy union strategy aimed at building missing
energy links, uniting markets, improving security of supply and increasing
competition by providing alternative supply channels. This “truly unifying
project” with exceptional benefits is supported by the EU budget with a grant
of € 187 million.
However, he added “more importantly
we are ending the energy isolation of the member states with a preference for
pipelines: hence the Balticconnector is a common European project that unites
European countries and European interests”.
Source: http://europa.eu/rapid/press-release_SPEECH-16-3497_en.htm?locale=en.
Advantages
First, gas interconnector between
Finland and Estonia will end the long lasting gas isolation of Finland and
help, boosting security of supply and bringing an economic lift to the region.
European Commission President Jean-Claude Juncker,
the Prime Minister of Estonia Taavi
Rõivas and the Prime Minister of Finland Juha Sipilä have signed a €187 million investment in the Balticconnector
– the first gas pipeline connecting Finland and Estonia.
Second, gas interconnector will end
the energy isolation of Finland which is largely dependent on a single
supplier. When the gas starts flowing by 2020, this project will unite the
Eastern Baltic Sea region with the rest of the EU energy market.
President Juncker
welcomed the investment saying that the project was the result of close cooperation and a proof
of true European solidarity: “it is more than linking gas systems of two
countries -we are bringing people and member states in the region closer
together by building a pipeline that unites European countries”. The project is
an integral part of the EU’s energy union and aims at building missing energy
links, uniting markets, improving security of supply and ending the energy
isolation of EU states.
Prime Minister of Estonia Taavi Rõivas said: "Balticconnector
signifies a key development for Nordic-Baltic energy market integration, for
region's security and diversity of supply and for consumer benefit. Regional
co-operation and EU's contribution allows for a change from entirely closed to
one of the most diversified and open regional energy markets in the Union with
further prospects in upcoming years."
Prime Minister of Finland Juha Sipilä added: "Balticconnector
is an important milestone in helping to complete EU wide energy market and
improving the security of supply in Baltic Sea region".
Till 2020 a total of €5.35 billion
will be invested in European priority projects under the Connecting
Europe Facility (CEF). When completed, the projects will enhance
security of supply and contribute to market integration. The grant was awarded
under Connecting Europe and covers 75% of the construction costs, the maximum
co-financing level permitted.
More information through
the following links: -Fact
sheet: Balticconnector – gas pipeline: Questions and Answers’;
-Innovation
& Networks Executive Agency (INEA): http://inea.ec.europa.eu;
-Energy Union website: http://ec.europa.eu/priorities/energy-union/index_en.htm;
-BEMIP project: http://ec.europa.eu/energy/en/topics/infrastructure/baltic-energy-market-interconnection-plan;
-DG Energy website: http://ec.europa.eu/energy/en/topics/infrastructure
Reference:
http://europa.eu/rapid/press-release_IP-16-3470_en.htm?locale=en; Brussels, 21
October 2016.
Detailed description
Balticconnector is the first gas
pipeline connecting Finland with Estonia and the Continental European Network.
It is one of the energy
infrastructure projects that benefits from the status of a Project of Common
Interest (PCI). These projects are critical to establishing the European
internal energy market and to achieving the objectives of the Commission's
Energy Union strategy to provide for secure, affordable and sustainable energy.
Under the Connecting Europe
Facility programme the Commission might provide financial support to projects
of common interest that are commercially non-viable within the regulatory
framework and provide significant externalities (e.g. security of supply,
solidarity, innovation).
The Connecting Europe Facility
budget amounts to €5.35 billion for the 2014 – 2020 period. Part of this
investment will take the form of financial instruments aiming to leverage
private funding for infrastructure development. The bulk of this EU support fund
will be used to provide support to commercially non-viable projects in the form
of grants like the one signed today.
The Commission is committed to
improving energy links in the Baltic Sea region. Gas and electricity
infrastructure in the region is not sufficiently interlinked, energy isolation
in the region must end and the region must be integrated with the rest of the
EU's energy systems.
To improve this, the Commission
agreed to an Action Plan and Memorandum of Understanding strengthening the
Baltic Energy Market Interconnection Plan (BEMIP) which was signed by the
Commissioner for Energy and Climate, Miguel
Arias Cañete, and Energy Ministers of the participating EU states on 8 June
2015.
The project will integrate the
Finnish gas system with the rest of the internal EU gas market in line with the
European Commission's Energy Security Strategy to ensure that no region in
Europe remains isolated. It is the result of a close regional cooperation
facilitated by the Commission under the Baltic
Energy Market Interconnection Plan (BEMIP).
Balticconnector’s priorities
Three main priorities are envisaged: - to end gas isolation of
Finland by connecting it to the Continental European Network; - to
increase the security of gas supply and solidarity in the
region; and to enhance competition and reduce
wholesale gas prices.
Furthermore, Balticconnector will
bring concrete socio-economic benefits to the Baltic States and Finland. Once
completed, Balticconnector, together with a gas link between Poland and
Lithuania (GIPL) will allow Finland and the Baltic States to diversify their
gas sources, routes and counterparts, helping them to effectively deal with
possible supply shortages in the future.
The total construction costs of the
project are about €250 million. Already in 2014, the project “Balticconnector”
obtained a €5.4 million grant for studies under the Connecting
Europe Facility (CEF).
In 2016 Balticconnector obtained a €187
million grant for works under the Connecting Europe Facility. This
amounts to 75% of the construction costs – the highest co-financing
rate possible under the Connecting Europe Facility, which can only be allocated
to a project when the added value of ending the energy isolation is
exceptionally high.
Some other technical
features
Balticconnector will consist of
three sections: 22 km Finnish onshore; 80 km
offshore and
50 km Estonian
onshore lines.
In addition, two compressor
stations in Inkoo, Finland and Paldiski, Estonia, will be constructed as well
as a pressure reduction station in Kiili, Estonia.
The total capacity of the
pipeline will be 7.2 million cubic meters of gas per day.
Energy projects in the
Baltic Sea region
In addition to Balticconnector,
several other gas projects have obtained the PCI status in the region,
including the Gas Interconnector Poland-Lithuania
(GIPL) and the Karksi project – the Estonia-Latvia interconnector, to which
the Commission allocated in 2016 a grant of €18.6 million.
Other projects include the
strengthening of the transmission network between Lithuania and Latvia, the
interconnector between Poland and Denmark (Baltic Pipe) and the expansion of
the LNG terminal in Świnoujście, Poland. These projects are central to
establishing a well operating gas market in the Baltic Sea region.
Source: European Commission, Fact Sheet in:
http://europa.eu/rapid/press-release_MEMO-16-3476_en.htm?locale=en.