The issue of security of natural gas supply is undoubtedly on top of the list of the energy agenda for the governments of Poland, Hungary, Slovakia and the Czech Republic. Regardless of the differences in the V4 states’ energy portfolio, there remains a number of common challenges and risks that threaten the energy security of the Visegrad region (V4).
The creation of a single gas market is one of the key objectives of the EU energy policy intended to provide consumers a greater choice of suppliers, lower prices and improved energy security. There is no doubt that energy security and energy policy are highly important for all of the V4 countries, particularly because natural gas is the largest imported energy source in Poland, Hungary, Slovakia and the Czech Republic, and the vast majority of the resource comes from a single supplier, Russia.
Despite the variance in the Visegrad states’ energy usage and the role of natural gas in their economies, there remains a number of energy security challenges shared by these countries. Over- dependence on energy supplies from one source, the lack of an integrated regional energy market, infrastructure bottlenecks, and disagreements over implementation of a united energy policy make the V4 countries weaker and more vulnerable. Moreover, the current Russian-Ukrainian conflict made the Ukrainian gas transit system under pressure, while, at the same time, Russia has a stated intention to reduce its Ukrainian transit for European deliveries to the lowest possible level, starting from 2019 and beyond, creating more anxiety and uncertainty over energy security in the Visegrad region.
Improving energy security amongst the V4 countries hinges on a market oriented, integrated approach based on mutual solidarity and cooperation. This requires full implementation of the third Energy Package and the application of corresponding legislation and best practices articulated in recent communications, laid down by the European Commission. A common gas market incorporating the V4 and surrounding countries would increase liquidity, enable more competitive prices and, above all, allow for efficient, market-based solutions to energy security issues. These developments are co-dependent and mutually reinforcing.
Coordinated infrastructure development and regulatory harmonisation are the key to the successful integration of the V4 countries. Since 2009, the V4 region has made significant progress toward integration and diversification that remains far from complete. A common gas market, inclusive of the V4 and surrounding countries, would increase liquidity, enable more competitive prices and, above all, increase energy security. These developments are underpinned by the further development of pending projects of common interest (PCIs) and improved efforts to harmonise regulatory practices and cross-border tariff setting. Together, these measures will allow to increase market-based flows across borders, optimisation of storage and improvement in emergency situation preparedness.
The Russian-Ukrainian conflict has caused many changes in European energy policy and the system of energy security. Russia’s annexation of Crimea, occupation of Donetsk and Lugansk in 2014, and ensuing nationalisation of elements of Ukraine’s energy industry raised fears of further transit disruptions in the rest of Ukraine and Central Europe. Russia covers more than 30% of the EU’s gas consumption, but the V4 countries import dependency rates are much higher, ranging from 55 to 90%.
The gas stress-test in 2014 revealed considerable vulnerabilities for Central European Member States to a supply shock based on two scenarios: first, a complete cut in Russian gas imports to the EU, and second, an interruption of Russian gas imports through Ukraine. The results showed that the V4 countries remained weakly integrated and mostly limited to national response efforts, a fresh reminder to regional decision makers that eff orts over the past five years to adopt liberalisation measures of the EU Gas Directive27 were not sufficient to ensure security of supply.
Thus, the common objective for the Czech Republic, Slovakia, Hungary and Poland is to integrate as a bloc within the North-South Corridor to connect with alternative, non-Russian sources. The eff orts underway in Europe to diversify and reduce Russian gas in the energy mix has prompted strategic responses from Gazprom, including gas discounts for some countries, a temporary decrease in the volume of gas export to Poland in 2014, and ultimately severely reducing gas flows through Ukraine from 2019 when the transit contract expires and Nord Stream 2 is commissioned.
The Visegrad states – due to their proximity, tight economic and cultural relations, as well as a sense of solidarity – closely identify with Ukraine. Therefore, political and economic stability, in addition to energy security of Ukraine, is critical for the security of the V4 countries. The hybrid warfare conducted in Ukraine by Russia has triggered many challenges in energy policy across the Visegrad region. As Moscow attempts to divide the Member States of the European Union, and the V4 countries specifically, the Visegrad authorities and experts should respond with a strategic vision for regional energy security, rather than concentrate on short-term national interests.