19 March, 2018

Romania’s energy projects and the geopolitical background

For EU Energy Security, EU-Russia relationship remains a key element. Within the European institutions, the term “EU-Russia Dialogue” is used. In my opinion, there was no such real dialogue. At least not in recent years.

The EU and Russia have opposite interests in their energy strategies. And this makes “dialogue” almost impossible, far from where it was in the early 00’s.

We can better understand the situation and the evolution of the different forces involved if we look from a geopolitical perspective.

We start with the fact that Russia is a revisionist player, while the EU is a status-quo player. This situation is confirmed by the multiple actions taken by Russia: Crimea’s annexation; the active influence exerted in the former Soviet republics; the interference in the political and social life of the former communist countries; the constant sabotage of the Euro-Atlantic option of some countries; the political and economic undermining of EU.

In relation to the EU, Russia is the one setting the agenda. Russia’s approach doesn’t come from dialogue but from a “pick and choose” approach, who decides, according to its own criteria, which are the countries to work with. Such an approach should not be a problem for the European Union, but it seems that Moscow’s influence is stronger than our common policies. Thus, disagreements and dissensions arise between the Member States, while at the same time serving the interests of Russia’s foreign policy.

For these reasons, the EU should stay united if it wants to be strong.

We cannot ignore the need for dialogue with Russia, but such a process can’t be done without considering also topics like the international law, Russia’s military presence on Ukraine’s territory, cyber threats, energy or the sanction regime.

Romania is an active part of the European efforts to diversify and secure energy sources. The BRUA project alongside the Black Sea reserves and especially the transformation of Constanta Port into a gateway for the Caspian gas directly to the center of the European Union brings with it Gazprom’s loss of control over the energy for the entire Central and South Eastern Europe.

And let’s not forget a fact: neither Romania nor the EU use energy as a political lever. We are just reacting to the unfair pressures exerted by Moscow through Gazprom.

How much are the Russian interests affected by Romania? It’s enough to look at our great neighbor’s exports structure: almost 50%[1] is hydrocarbons and energy in its various forms (except nuclear energy like nuclear ores and reactors). To this, we add the arms exports – Russia covering 25% of this global market[2].

This is a business of tens of billions of euros a year. Every euro less in the oil price means, for Russia, a minus 2 billion euros in revenue[3].

In its relationship with the European Union (which is officially perceived as the most important market for energy and hydrocarbons coming from Russia), the fall in oil prices between April 2011 and February 2016 also meant a decrease in revenues from oil and gas, from € 160 billion/year in 2013 to € 78 billion/year in 2016[4].

With a 70% dependency on oil and gas revenues, it is obvious that the accumulation of some hundreds of billions, which went missing over the years, put enormous pressure on the system.

Against this background, considering Russia’s unorthodox practices and the proven force of its propaganda apparatus, we can expect only an intensification of Moscow’s involvement, the activation of new intervention instruments and an increased tension.

It is no accident that the perfect evolution of the BRUA project, which in turn opens the way for other developments in the energy market, has become the target of a “special” interest.

Why? Because if things continue to go in the same direction as before, in just a few years Russia will lose the influence exercised through Gazprom and the central and southeastern Europe will break loose from its dependence on Russian gas sources. It is a massive political and a financial loss!

Articles which uses an “innocent” confusion between gas transport and gas exploitation/selling, that target the pride in Romania’s relationship with Hungary, or the fake patriotism of “we do not sell our country” have begun to go around. This phenomenon occurs immediately after the BRUA project has proven it can overcome difficulties and can go forward, the parent company – Transgaz has started to play seriously at the regional level, and Southern Gas Corridor, the pipe on which BRUA also depends, has received a strong green light with the record EUR 1.5 billion of EIB financing[5].

We can overlook the views of self-dubbed analysts. Ultimately, these opinions only engage them or, at most, the media platforms that offer them exposure. They can afford to confuse oil and gas companies – such as OMV Petrom and Exxon Mobile or Black Sea Oil & Gas, with those that transport gas – Transgaz and those that distribute gas to the final consumer – here the list is much longer, over 130 companies licensed in Romania.

Claims like “4.4 bn cbm a year of Romanian gas from the Black Sea for Hungarian companies” sound more like “Radio Moscow”. In the first phase, BRUA pipelines will transport Azerbaijani gas, not Romanian, and this gas comes from the Caspian Sea through the Southern Gas Corridor, not from the Black Sea.

I consider to be more disturbing hearing the same mistakes from political leaders, some with real power and influence. Moreover, such declarations are used as an argument, not in electoral campaign statements but in establishing Inquiry Parliamentary Commissions[6].

The BRUA project, in its first two phases scheduled for 2019 and 2022, the only ones which are budgeted and funded at this time, involves a 479-km pipeline. This pipeline interconnects the gas transport networks in Bulgaria, Romania, Hungary, and Austria, to which are added compressor stations and bidirectional transport capacities. BRUA is the direct link between Southern Gas Corridor and the Central European area. The first phase of the project will allow a transit of 1.75 billion cbm/year and the second phase will raise this capacity to 4.4 billion cbm/year. This gas comes from resource owners, who in the first phase have no connection with the Black Sea. Romania, through its Transgaz network operator, is to get taxes and tariffs from gas transit.

The project is strongly connected with the needs of the European energy market. This is why a third phase was planned, to connect BRUA with the gas reserves that would enter into operation in the Black Sea perimeters. This phase also aims at increasing BRUA capacity.

When you know that the tender for the transit capacity through the interconnection point Romania-Hungary comes after years of public consultations, attended by all the interested suppliers and operators in the region, procedures initiated by ANRE and with the knowledge of the European Commission, followed by an auction which was not disputed by any of the participants, it is strange to state publicly that “another thievery is being prompted by Transgaz by giving away the Romanian gas from the Black Sea.”[7]

Even more strange is when you notice that those, who suddenly engage in expressing opinions on energy and geopolitics issues, have no history of this, and their passion has been discovered only since February 2018.

Even if it is difficult, perhaps impossible to prove a direct link, and this is the situation with most similar cases, one cannot deny a reality: all these elements fit together and rather serve Russian interests. It’s sad to see how those people seem not to realize they are used in others’ games.

Around us, there are not so friendly forces, which act through very deceptive instruments. Sometimes even without these instruments realizing they are being used. Their seemingly positive energies are directed in a completely wrong direction.

I believe the discussions and energies, which have recently been activated in relation to Romania’s energy projects (and at the same time of the European Union – because, unlike other Member States, Romania’s efforts are all in line with European strategies and for the benefit of the entire region), are dangerously close to the paths and methods of hybrid warfare. This is a type of conflict that does not involve tanks, but its weapons are even more effective in generating political instability, gaining economic advantages, preserving certain power structures, or blocking projects.

I believe that Romania’s early success in becoming an energy hub and the performance of some Romanian companies, such as Transgaz, are at present the target of adverse forces, opposing to the interests of both Romania and the European Union. This situation is a strong argument for the acute need of the antibodies needed to fight such threats, both at national and EU or NATO level.

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[1] https://atlas.media.mit.edu/en/profile/country/rus/

[2] https://www.verdict.co.uk/need-know-russias-arms-exports/

[3] http://www.bbc.com/news/business-29643612

[4] http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113440.pdf (page 5)

[5] http://www.eib.org/infocentre/press/news/topical_briefs/2018-february-01/southern-gas-corridor-trans-adriatic-pipeline-tap.htm

[6] https://www.agerpres.ro/politic/2018/03/04/tomac-usr-si-pnl-au-refuzat-constituirea-unei-comisii-parlamentare-de-ancheta-privind-relatia-transgaz-cu-operatorul-maghiar–66407

[7] http://www.mesageruldesibiu.ro/pmp-pune-tunurile-pe-transgaz/