On May 2, the European Union and the United States convened a conference with the participation of entrepreneurs aiming to develop LNG supplies from the United States to Europe. We asked to comment on that prof. Jerzy Buzek, former Prime Minister of the Republic of Poland and current chairman of the European Parliament’s Committee on Industry, Research and Energy (ITRE), who participated in the talks.
BiznesAlert.pl: Why does the European Union invest in LNG?
Jerzy Buzek: Because the supply of liquid gas is the best diversification, and thus we gain an access to the gas both from different parts of the world, as well as from various parts of Europe. Of course, this is not an end in itself. However, first of all, it is about strengthening our energy security and, secondly, about more competition on the market. Higher competition is usually a guarantee of lower prices – for individual consumers, but also for industry or small and medium-sized enterprises. It is not a coincidence that diversification of sources and routes of energy supplies are one of the basic EU goals we have been building for the last four years of the Energy Union.
What is the potential of developing supplies from the USA?
Now it’s quite fair, but it was not always like that. I remember how in spring 2015 we started talks with the Americans about the lifting of the ban on oil and gas exports. I led them as chairman of the Committee on Industry, Research and Energy of the European Parliament, within the EU-US Round Table – in Brussels and then in Washington. I was patiently explaining how the supplies of US energy will improve the situation of the EU, especially Poland and Central and Eastern Europe; and that for the American energy industry they will mean an infusion of billions of dollars. I argued that it was in the interest of the whole transatlantic community, the classic “win-win”.
And that convinced the Americans?
I think so. Already in December 2015, they lifted the ban on oil exports, which had been in force for 40 years, and in April 2017 – they lifted ban on gas exports. They also signed the first contracts, including with Poland, while the first ship with the American LNG, “Clean Ocean”, entered the terminal in Świnoujście in the early June 2017. I remember this extraordinary feeling of satisfaction, relief and joy that accompanied me – it worked out! Today, also during the historic business summit within the EU-US Energy Council, we are talking only about how to import more of this gas, and not – if and why to do it at all.
Can the price of liquefied gas be competitive to traditional supplies?
That’s what we discussed on Thursday in Brussels with Rick Perry, US Secretary of Energy. After all, we do not want the Russian gas to be exchanged into a more expensive American gas – even if we have a guarantee, otherwise important, that no one will stop this supplies us political reasons. But the question about competitiveness is also a question about the EU internal energy market. On such market – a well-connected with infrastructure, where you can send gas from your country to other country at any time, where everyone follows the same rules – the price will be decisive in the race for the customer. And as Secretary Perry told me, Americans are ready for such a race. At the same time, the fact that Poland may 1/3 of gas demand – and in the future more than half – satisfy with the LNG supplies, gives us a good negotiating position in any talks about gas delivered by pipelines.
How does the development of LNG supplies from the USA relate to competitive projects like Nord Stream 2?
This is a very good question. Today, supporters of NS2 often accuse me of – in fact – that I only support the US LNG sales plans. It’s a complete misunderstanding. I made efforts to lift gas exports from the US at the beginning of 2015, at least half a year before the Nord Stream 2 construction plans were announced! But when it happened – when supplies of 110 billion cubic meters of gas to Europe would be depend on two parallel gas pipelines from the same direction only (Nord Stream 1 and Nord Stream 2), and transit through Ukraine is seriously under threat – the importance of LNG has dramatically increased. This alternative gives us some level of security.
How do you assess the Nord Stream 2 complaint against the gas directive?
Now it is clear how much NS2 investors were hurt by the obligation to apply EU regulations towards this gas pipeline. When NS1 was under construction the law was not yet in force and Gazprom gained a monopoly position. The new directive covers not only NS2, but all infrastructure from outside the European Union, and regulations for external companies will be exactly the same as those already applicable to any supplier within the EU. I can therefore only repeat what I said – as the European Parliament’s rapporteur – at the plenary debate before the final vote on this directive: if someone has a problem with the directive, it only shows his intentions, not ours.
How to use European funds for further diversification?
The EU has been supporting this diversification for years. On Wednesday, we celebrated 15 years of our membership and we could hear everywhere the question: what the membership gave Poland? ” I answer: almost everything when it comes to energy security. When we were entering the EU in 2004, we were a country extremely dependent on suppliers from the East and its fantasies. Today, we have increased our capacity to import gas from other directions by 55 percent – thanks to the aforementioned LNG terminal in Świnoujście, expansion of connections with Germany and the Czech Republic or the possibility of transferring gas in two directions by the Yamal pipeline. Everything was possible thanks to EU support.
And yet this is not the end: by 2022 we will have completed the construction of the North-South Corridor – headed by Baltic Pipe from Norway, extension of the terminal in Świnoujście, a floating terminal for LNG pick-up in Gdansk or construction of connections with Lithuania, Slovakia and Ukraine. Pursuing all these projects we can also rely on EU support – from the structural funds to the special program “Connecting Europe”.
Interview by Wojciech Jakóbik