Amber Grid CEO, Saulius Bilys, argues that closer regional cooperation delivers very clear benefits to end-users and that the recently implemented partnerships and projects improved the security of gas supply for Lithuania and for the entire Baltic region.
What do you want to accomplish as a CEEP member?
Amber Grid, as part of Lithuania’s state-owned gas and electricity transportation infrastructure group EPSO-G, joined the CEEP in its endeavor to contribute to the drive of the region towards a more integrated, thus more competitive and efficient energy market across the continent, be it gas, electricity or any other energy source or route.
Which should be CEEP’s priorities for the next years from your perspective?
As you know, Amber Grid is in charge of national gas transportation system and it is hence natural that we are a strong believer and an advocate for an increased usage of natural gas - environmentally friendly energy resource across the region. We also feel that CEEP role is also in helping the relevant EU institutions to strike the right balance between common to all pan-European issues and national economic challenges.
What is your opinion on the ongoing legislative proposals concerning the security of gas supply?
We welcome the new legislative proposals aimed at enhancing the level of energy security and providing the basis for additional measures targeted for the security of gas supply. We strongly support the principle of solidarity envisaged in a proposed update for Security of Supply Regulation that opens up more options to safeguard gas supply to protected customers in difficult climatic conditions or in the event of gas supply disruptions. Talking about the overall framework, we believe the objectives of gas supply security should be achieved through interconnections, new sources of supply, closer co-operation, cost-efficiency and in the way that gas markets would be the least distorted.
How should be designed a functional common regional gas market and how far are we from having one in the Baltic region?
We believe that when we talk about the energy sector, be it gas infrastructure or electricity, closer regional cooperation delivers very clear benefits to end-users – people and businesses - in all countries involved. That is why we aim to transform ourselves into a transmission system operating in the single Regional and then European gas market. This goal is at the heart of our daily activities today and the days ahead. Over the years, we have always been strong advocates of closer cross-border cooperation, market integration, merging neighbouring national gas markets into East Baltic regional gas market that delivers the economy of scale to all countries involved. And I am happy to see that today once we start talking about closer cooperation, our regional partners and us are on the same page. A special working group that teamed ministries, transmission system operators and market regulators from the entire East Baltic Region (Lithuania, Latvia, Estonia and Finland) has been already set up and defined regional gas market development plan.
On top of that, late last year, prime ministers of Lithuania, Latvia and Estonia signed a declaration on development of regional market zone by 2020. This lit a green light for merging of the national gas markets, and provides key milestones for tangible reforms necessary to make sure that the single gas market in the Baltics is functional. We truly believe that once this single market building process is completed we all will be proud that gas supply across the region is much more consumer friendly and cost efficient also aiding to boost competition that typically helps to scale gas prices to end-users in all countries involved. At this point the single gas market route covers the three Baltic states, but we look forward for even wider cooperation as soon as gas interconnection between Estonia and Finland becomes operational in 2020. We will definitely be more than happy to see our Finnish counterparts be part of a common market zone.
Another milestone I want to mention is the gas Interconnection Poland-Lithuania (GIPL). This project is aimed at providing integration of the single East Baltic Region gas market with the rest of Europe. The commissioning of this interconnection, expected to be in place in 2021, will mark the end of fragmentation of national gas markets in the region and start a new era of fully fledged competitive gas market. In Lithuania, we have passed the permit granting process for the project and now are closely working together with our good partner GAZ-SYSTEM S.A. both aiming to deliver the project in time and on budget.
To put long story short, our partners and we see very clear benefits of cross boarder cooperation and integration which at the end of the day will create a liquid and competitive regional gas market to the benefit of people end economies involved.
How has the launch of the LNG terminal in Lithuania influenced the domestic gas market?
The launch of LNG terminal in Lithuania’s Klaipėda port back in 2014 marked the end of what it used to be a historic dominance of a single natural gas supplier on the market. The new terminal, the first of its kind in the region, opened a new opportunity to import LNG supplies from the global markets creating competition between various gas suppliers. The outcome is really promising – the gas supply alternative has already helped Lithuanian importers to negotiate better prices. It is also worthwhile mentioning that for example last year more than 60% of gas, imported to our system for the users in Lithuania and the other Baltic countries, was supplied from the terminal. Looking ahead we see that the terminal, symbolically named “Independence”, will be a key element for gas price and portfolio leverage on the local market also being an important gas supply security factor across the Baltic state region. The LNG terminal can cater for over 90% of the demand of Lithuania, Latvia and Estonia and, once GIPL will be in place, to contribute to Poland strategic goals in energy sector, thus supporting its clear status as infrastructure of regional importance.
Amber grid Chief Executive Officer, Saulius Bilys