As the global energy industry continues to evolve and grow, the market is experiencing changes in every aspect; specifically in the legal and regulatory framework. In order for the Central and Eastern European gas industry to successfully progress and compete with the Western markets, it is essential for the gas players to keep ahead of the changes and ensure they are overcoming any potential challenges.
Following from 12 years working in numerous law firms, Ana Stanic founded E&A Law in 2017 to provide advice and legal representation services in the field of Energy, Dispute Resolution and EU and International Law. Keen to hear the expert views on the current market conditions in the region ahead of the CEE Gas Conference next week, 7-8 March, Gastech Insights spoke with Ms Stanic, Executive Advisory Board Member for the CEE Gas Conference and Principal of E&A Law.
Gastech Insights: What are the key updates on major infrastructure projects within the Central and Eastern European region?
Ana Stanic: The key update regarding infrastructure projects in the region is the announcement of the 'Connecting Europe Facility' Coordination Committee on 25 January 2018 approving the European Commission’s proposal to invest €873 million in European energy infrastructure projects. Of the 17 projects, nine are in the gas sector and these projects are set to receive €193 million.
The key projects in the region which have received funding are the LNG Evacuation Gas Pipeline Omisalj-Zlobin-Bosiljevo-Sisak-Kozarac-Slobodnica, which has received slightly over €16 million for Works for Phase I, and the EastMed pipeline project which received €35 million to undertake a study.
Gastech Insights: How will the current political environment affect international gas trade? And will this affect the CEE region?
Ana Stanic: Over the years there has been an increase in the politicisation of energy in the European Union which is undermining legal certainty and therefore negatively impacting on investment. Although the politicisation of energy in the CEE region could be of some concern, given the key role state-owned incumbents play in the sector, there are still many opportunities present.
The IEA expects that the challenges of digitalisation, integration of renewables into the energy sector and climate change will require significant investments from the private sector including from new entrants like technology companies rather than utilities. This will happen if the CEE region can deliver a transparent and stable regulatory environment. Moreover, a shift from gas to renewables is likely to be a better option in the long-term development which will not only deliver climate change targets but reduce energy dependency.
Gastech Insights: What are the main challenges for the development of the gas market in CEE region?
Ana Stanic: I think the main challenges are still the same. The first being the lack of physical interconnectivity, especially in South East Europe. There is, however, some progress to report on in particular concerning IGB (one of CESEC’s cornerstone projects) where tenders for EPC contracts have been issued and discussions for seeking an exemption under third energy package have started.
The second key challenge facing the region is the continued domination of the energy sector by state-owned incumbents. In the last year, the state has increased its ownership of companies in the energy sector in a number of CEE countries.
The third challenge concerns the small size of the individual gas markets especially in South East Europe and the inability of the region and the EU to come up with truly regional projects to integrate markets.
As far as infrastructure is concerned the EC has simply not been rigorous enough in weeding out the losers from the winners when drawing up the PCI lists. ACER’s criticisms of last year’s PCI process for “limited availability of actual cost and benefit data and their assessment in monetary terms” and the “lack of assessment of the proposed projects’ impact on existing infrastructure” are of great concern especially for the CEE region where projects tended to be proposed on political grounds in the past. There is a continued lack of will to develop regional projects as every country has its own “national champion project”. This will change when the PCI process is depoliticised and regional commercial projects are selected.
Gastech Insights: With the CEE Gas Conference taking place next week, what can attendees expect to take away?
Ana Stanic: Attendees of the CEE Gas Conference will be able to get the most up to date information regarding key energy projects in the region directly from the project sponsors and discuss the latest legislative and other proposals concerning the region with leading government officials and experts.
Would you like to hear more? With only 1 week left until the CEE Gas Conference, register for your delegate pass today to hear gas leaders discuss, "What are the requirements of a regulatory framework to promote liquidity across the region?" and more key industry topics.
Image courtesy of E&A Law
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