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A challenging prospect
With the aims of the Budapest LNG Summit in mind – the connection of regional gas markets in Central & Eastern Europe (CEE) to a diversified mix of natural gas sources through interconnector pipelines and reverse-flow – we found this thought piece by Nicolas Peugniez on the challenges of implementing multi-state gas infrastructure projects particularly intriguing.
Mr. Peugniez, who is a senior strategy analyst at GRTgaz and has over 10 years of experience in subsidiaries in Central Europe, writes that “too many cooks spoil the soup” when it comes to infrastructure projects in CEE.
As a case-in-point he recalls the “Brouhaha over BRUA” just this summer, when Hungary’s transmission system operator (TSO), FGSZ, announced it would pull out of the open season for the BRUA interconnection between Bulgaria, Romania, Hungary and Austria, to focus on an interconnection between just Hungary and Romania.
Lots of cooks, indeed
According to Peugniez, the difficulty stems from there being so many players involved in each multi-state gas infrastructure project. In each country involved in a project, he explains, there’s typically three parties: a favored gas market player, a TSO and a national regulatory authority. So, if four countries are involved in a pipeline project, for example, at least 12 stakeholder organizations must come to agreement – and that’s probably the bare minimum of participants!
Taking into consideration changes in leadership at such organizations, the process might get even more complicated, he observes, but also recalls the successes chocked up by the multiple stakeholders in the unrealized Nabucco gas pipeline project.
He notes Brussels’ support for regional market integration via 2015’s Central and South Eastern Europe Gas Connectivity initiative, which entailed the formation of a group of countries throughout the region with objectives for gas infrustructure like the ability to leapfrog over hurdles faced by interconnector projects, for one.
In terms of market design, Mr. Peugniez notes the efforts of TSOs, regulators and others in the Czech Republic, Slovakia and Austria to come up with solutions involving capacity and trade that integrate gas markets and create a “sizeable” market.
What’s on the menu?
The final question he raises, is whether all of the countries in the region can “cook” together for a “tasty broth” – market integration – or whether some players might go their own way and end up as “side dishes.”