Energy Security of Lithuania and Impact of Nord Stream Project dr.Tomas Janeliūnas The Institute of International Relations and Political Science

Priorities of Lithuania’s Energy Security  Ensuring reliable energy supply and functionality of energy infrastructure;  Diversification of energy supply sources;  Reduction of dependence on energy resource import (by reducing energy intensity and switching to alternative or renewable energy recourses).

Energy Dependence from Russia - lessons learned  Energy blockade from Russia/Soviet Union in 1990  Disruption of gas supply in 2004  Stopped supplying of oil by Druzba pipeline since July 2006

Oil supply and refining in Lithuania

Importance of Butinge oil terminal  Butinge terminal was considered to be the main instrument for prevention of energy blockade  The terminal became an important element of oil export system and provided an opportunity for Lithuania to become an oil transit country  Currently Lithuania has physical capability to import oil by see and in this way Mazeikiu oil refinery can still function profitably

Oil loading in Butinge terminal Oil loaded (mln.t.)

Oil sector – the main conclusion The development of oil sector in Lithuania has proved one simple principle – mediation in energy sector (that is - participation in transit and process of refining) strengthens energy security and economically is more useful than being just a consumer

Dependence in gas sector  Gazprom is the only gas supplier to Lithuania.  Natural gas is transported to Lithuania via the only Minsk-Vilnius- Kaliningrad, pipeline, which is controlled by “Gazprom”.  Gazprom is one of the biggest stockholders of the main Lithuanian gas operator “Lietuvos dujos”. (Gazprom” has 37%, his main partner in Western Europe “E.ON Ruhrgas International AG” share 39%, and 18% is left for Lithuanian government).  There are no gas storage facilities in Lithuania.  Lithuania does not have capabilities to deliver, recast or store big quantity of liquid natural gas (LNG).

Lithuania’s reaction to the Nord Stream project  Dissolved hopes about possibility to become a gas transit country  Fears about increasing pressure of Gazprom on gas price  Evoked clash between the CEE and Western European countries.

Possible gas pipelines from Russia to Europe Yamal 1 Yamal 2 Amber NEGP

Impact of the Nord Stream project for Lithuania’s energy security  The Nord Stream, compared to more favourable “Amber” pipeline, will increase Lithuania’s energy insecurity.  Lithuania will remain just a gas consumer, state budget will not get extra money from gas transit.

Impact of the Nord Stream project for Lithuania’s energy security (2)  The Nord Stream project (among other recent Russia’s moves) contributed to become energy security one of the main topics in the global and EU agenda.  Baltic and Central European countries have got a chance to strengthen regional cooperation in the energy sector; The Nord Stream project gives to Baltic states and Poland a new impulse for solving the energy security problems by common efforts

Future of Lithuania’s Energy Security  The main structural changes in Lithuania’s energy security sector could take place only if EU consolidates its Common Energy Policy.  More intense consolidation of interest may take place rather in Baltic and CEE countries. Two-way movement of energy security policy may emerge in EU  Lithuania need to take a very proactive position in its EU policy to ensure the security interest in energy sector.