Energy security has become one of the most important issues on the agenda of the European Union since the second gas crisis of 2009 when Russian gas flows to Europe were interrupted in the course of Moscow’s dispute with Ukraine over transit fees and higher gas prices. Even though energy security is of importance for the EU as a whole, with the Commission estimating that the import dependency of the Union will reach 73-79 per cent by 2020 and close to 90 per cent by 2030, especially the new twelve member states will be affected by any decision Russia makes about future (oil and) gas exports.1 In particular the Visegrád countries face a number of common challenges that make cooperation within the V4 setting not necessarily obligatory but highly recommendable.
The gas crisis of 2006 when Russian gas supplies dried up for a couple of days and Central Eastern European (CEE) states were forced to rely on their stocks was only a precursor to the events of 2009. Three of the V4 countries reported significant reductions in supplies. Whereas Hungary faced a severe drop in gas supplies of around 40 per cent, Slovakia received 30 per cent less gas than contractually agreed upon. Poland’s gas supplies were around 14 per cent lower, compared to normal supply levels.2 The dispute lasted four days, but alarmed the EU only shortly.
The gas dispute between Ukraine and Russia in 2009 was more severe in scope, length and consequences, especially for the V4 countries and its eastern neighbours, Romania and Bulgaria. Supply cuts affected Hungary, Poland, Slovakia and the Czech Republic so severely that Slovakia declared the state of emergency.3
The country, which depends almost entirely on Russia for its natural gas supply even considered restarting a nuclear facility shut down before its accession to the EU.4 Supplies from their western partners as well as supply delivery cuts to industrial customers and other measures to reduce gas consumption helped to convince the Slovak leadership from bringing the phased out nuclear power plant back onto the grid.
Common issues of the V4
The deteriorating relations between Russia and Ukraine, and a smaller degree, also between Russia and Belarus, have affected and threatened the energy security especially of the new member states. The problems these countries face manifold, yet some are shared by all: All of them depend to a very large extent on Russian gas supplies. Russia is the only, or the biggest source of their energy imports and almost all of them have very weakly diversified imports. In case of a supply cut, no alternative supply routes exist, leaving these countries literally in the cold. The problem is amplified by the fact that most of these countries represent only small markets, meaning competition is very limited, and their historical role as transit countries for natural gas from Russia to western markets.
The Czech Republic it has a relatively well diversified portfolio with regards to its natural gas supply. Even though the largest part is imported from Russia – around 58,8 per cent – the country receives substantial amounts of gas from Norway (34,6%) and Germany (6,6%).5 This makes the country stand out among the countries in the region that are mostly exclusively importing gas from Russia. Furthermore, even if the German exports are re-vamped Russian gas, it marks a tremendous effort of successful diversification, given that the country had imported close to 80 per cent of its gas from Russia and around 20 per cent from Norway in 2008.6 Poland’s gas imports are covered almost entirely by Russia (90%), with Germany providing the remaining ten per cent coming from Germany, even though this gas, too, is often of Russian origin.7 Slovakia has been relying entirely on Russian gas before the 2009 gas crisis.8 Hungary, too, is dependent to a large extent on Russian gas. Close to four-fifth of its gas imports come from Russia, with the remainder coming from both Germany and France as well as Turkmenistan.9
Another feature that currently sets the Czech gas market apart from its partners in the V4 framework (and also the extended V4+) is interconnection.10 It is relatively well integrated into the European gas market. Interconnectors exist between the Czech network and Germany, allowing the country to tab into the new Nord Stream pipelines through the OPAL (Ostsee-Pipeline-Anbindungs-leitung – Baltic Sea Pipeline Link) and Gazelle pipelines. OPAL will allow Russian gas delivered through Nord Stream to flow to the Czech Republic. Furthermore an interconnector in Cieszyn links the country to the Polish gas networks since late 2011.11 However, the gas infrastructure of the Soviet Union and its east-west orientation currently limit even the Czech Republic’s possibilities to diversify. Any effort to acquire additional natural gas supplies from the Caspian region, such as energy rich Turkmenistan, is currently dependent on flow through the Russian pipeline system.
Unlike the Czech Republic, Poland has not undertaken serious measures to diversify its imports before the 2009 gas crisis. This is partly due to the fact that natural gas plays a smaller role in the country’s energy mix than, for example, in Hungary. However, the events of 2006/9 and the Russo-German go alone approach with Nord Stream, against the objections brought forward by Poland, the Baltic states as well as Sweden and Finland, have given the government enough stimulus to push ahead with plans to build an LNG (Liquefied natural gas) terminal in Świnoujście. Furthermore, interconnectors link the Polish gas network to Germany (at Lasów) and the Czech Republic (at Cieszyn). Another interconnectors is planned and will connect Poland and Lithuania. This will allow a future linking between the Baltic Energy Market – the Baltic States, Finland, Sweden, Poland and Germany – with the V4 energy markets.12 Just recently intentions to link the gas networks of Poland and Slovakia have been announced. Such an interconnector would mark a first step towards the creation of the EU’s Southern Gas Corridor.13
Hungary finds itself in a particularly paradoxical situation. Even though the country is relatively well interconnected, with interconnectors liking the Hungarian gas network to Austria (since the mid-1990s), Ukraine and Romania, it is very sensitive to supply cuts. Around 40 per cent of its primary energy supply is covered by natural gas,14 a figure that is expected to rise even more till 2030. The majority is imported from Russia and Turkmenistan (through Russian pipelines).15 However, the government has recognised the short-comings of its diversification efforts and new interconnection with Slovakia, Slovenia as well as Croatia are planned and will allow the Hungary access to natural gas delivered with LNG ships to the LNG terminals in Croatia and Italy.
Slovakia has been hit hardest among the V4 countries during the 2009 gas crisis. Only one interconnector currently connects the Slovak gas network to Austria. Other interconnections include links with the Hungarian and the Czech network, both of which were affected by the crisis, too. Given the country’s dependence on Russia for almost 75% of its natural gas imports – the remainder is provided by E.ON and GDF Suez – diversification efforts have been relatively modest.16 Two proposed projects, the Norwegian-Polish interconnector and an inter-system connector that would have preceded the Norwegian-Polish project, had received little to no attention from the Slovak government.17
Taken individually, none of the V4 countries can rival the natural gas consumption volumes of their western European partners. Germany’s natural gas consumption, the second highest in the EU behind the UK, is more than eight times higher than Hungary’s, and still more than five times higher than Poland’s.18 This has serious implications for the energy security of these countries as it negatively impacts on the competition on the domestic energy markets. Whereas in Germany the number of retailers selling natural gas to customers has reached 820 in 2009, and in Italy stands at 303, the respective figures are considerably smaller in Poland (52), Slovakia (14), Hungary (28) and the Czech Republic (28).19
Similarly, the market share of the largest natural gas retailers, indicates that the domestic natural gas markets are usually heavily dominated by one company. Hungary’s natural gas market is the exception here, as the largest natural gas retailer holds a share of slightly more than 15 per cent of the market. In the Czech Republic, the market leading natural gas distributor has a market share of 62,4 per cent. The Slovak market is even stronger dominated. Here 76 per cent of the natural gas market share is held by the largest natural gas retailer. In Poland, practically no competition on the natural gas market can be detected. PGNiG has a market share of well over 90 per cent, giving it virtually a monopoly over imports and distribution of the fuel.20
The lack of competition between energy companies, Hungary excluded, leads to the unfortunate situation that energy import infrastructure, as well as storage facilities, remain limited, whereas investments in alternative supply routes are non-existent. These problems are present in all four Visegrad countries, and efforts to invite other European energy companies to enter their national markets have been unsuccessful. There is no doubt that national governments have been reluctant to embrace more competition that might threaten the position of the often still partly state-owned energy utilities.
Last but not least, all V4 countries are affected by the EU’s directives to reduce the emission of greenhouse gases (GHG) by 2020 and beyond. The directive on the promotion of the use of renewable energy,21 which was agreed upon forces the countries to increase the share of renewable energy sources in their energy mix whilst the climate change package and the therein contained 20-20-20 goals will prove major challenges for the region, and especially Poland and the Czech Republic. The triple-20 goals that aim at a reduction of greenhouse gas emissions by 20 per cent by 2020, compared with 1990 levels, as well as an overall share of 20 per cent of renewable energy sources in the EU’s energy mix and energy consumption cuts by 20 per cent,22 are especially difficult to achieve for the new member states of the EU, given their overall less modern and less energy efficient economies.
However, even though the countries of the V4 region share a number of common problems, they do not agree on the assessment of Russia as a their most important (or sole) natural gas supplier. Whereas the governments in Prague and Warsaw perceive Moscow and its natural gas export monopoly Gazprom as a threat to the national security of their countries, Slovakia and Hungary seem to regard Russia as a reliable and trustworthy partner.23 Pipeline projects like Nabucco and the Russian-backed South Stream will help improve the energy security of the V4 countries to some extent. The fact that both projects would bypass Ukraine already means an improvement as natural gas supply deliveries will be no longer affected by disputes between Kiev and Moscow.
The following efforts – besides the earlier mentioned interconnection of markets could help to improve the V4’s position towards Russia and thus its energy security overall:
Stronger cooperation and purchase group: Moscow enjoys leverage over all countries in the region, especially because no talks to coordinate their position are held before negotiations. Instead Russia is allowed to apply divide-and-rule tactics, playing the countries of the region against each other. Individually their imports of natural gas (and oil) account for only a small share of Russia’s overall exports, however, combined they would make the V4 one of the biggest purchasers of Russian fuels. In 2007 Germany imported around 40 bcm of natural gas from Russia, whereas the combined imports of the V4 amounted to around 38 bcm.24 One of the most effective measures to boost the security of the V4 would be a common position of all involved countries towards Russia. This could be accomplished effectively, once the V4 markets are properly interconnected, through either intergovernmental agreements or more effectively the creation of what might be labelled an energy purchase group. This organisation would be compromised of the major energy companies in the region.
Cooperation in research and development (R&D) of carbon capture storage (CCS) technology and a wider implementation in the V4 region could tap the regions, especially Poland’s and the Czech Republic’s, vast coal and lignite reserves which would increase the region’s energy security and would allow them to continue using solid fuels to maintain their electricity and energy production levels. Given the cost of further R&D in the field of CCS and the installation of or upgrading of existing power plants with CCS technology, a cooperation in this area would, assuming further interconnection of electricity and energy networks, help to drive down costs for the technology and increase the energy security of the region.
- Note that the security of supply with regards to oil is not covered in this paper due to the fact that oil is a globally traded good with relatively stable costs, regardless of its origin. This allows even the V4 countries to diversify their imports away from Russia to some degree. Nonetheless one should not assume that the situation is significantly better but interconnection is somewhat better and ensures a relatively stable supply of this commodity. ↩
- Ukraine ‘stealing Europe’s gas’ (02.01.2006). Available at http://news.bbc.co.uk/2/hi/europe/4574630.stm ↩
- FACTBOX – 18 countries affected by Russia-Ukraine gas row, (07.01.2009). Available at http://www.reuters.com/article/2009/01/07/uk-russia-ukraine-gas-factbox-idUKTRE5062Q520090107?sp=true ↩
- Slovakia to restart nuclear plant (10.01.2009). Available at http://news.bbc.co.uk/2/hi/7822556.stm ↩
- Petr Binhack and Jakub Jaroš : Energy policy of the Czech Republic, in: Joanna Świątkowska (ed.): Energy security of the V4 countries. How do energy relations change in Europe, Kraków, 2011. ↩
- IEA: Oil and Gas Security – Czech update 2010
Available at http://www.iea.org/papers/security/czech_2010.pdf ↩
- Warsaw Business Journal: Poland’s energy sector and Russia’s position, February 20, 2012. Available at
- Simon Taylor: Gas crisis spurs talk of nuclear revival, January 22, 2009 http://www.europeanvoice.com/article/imported/gas-crisis-spurs-talk-of-nuclear-revival/63691.aspx ↩
- IEA: Oil and Gas Security – Hungary 2012. Available at http://www.iea.org/papers/security/hungary_2012.pdf ↩
- The term V4+ in this paper entails the original V4 countries as well as Bulgaria and Romania. It should not be confused with the Visegrád+ programme of the V4 group. ↩
- Polish-Czech interconnector launched, September 14, 2011. Available at
- European Commission: Baltic Energy Market Interconnection Plan (BEMIP). Available at http://ec.europa.eu/energy/infrastructure/bemip_en.htm ↩
- Polish, Slovak Companies Choose Contractor for Feasibility Study of Natural Gas Interconnecto, April 3, 2012. Available at http://www.naturalgaseurope.com/gazoprojekt-eurstream-gazsystem-slovak-polish-pipeline ↩
- Kornel Andzsans-Balogh: The Road to Hungarian Energy Security, March 15, 2011. Available at
- IEA: Oil and Gas Security – Hungary 2012. ↩
- SPP enters into diversification contracts with E.ON Ruhrgas and GDF SUEZ, June 26, 2009. Available at http://www.spp.sk/en/the-media/news/press-releases/?sprava=380. ↩
- Andrej Nosko, Peter Ševce: The Evolution of Energy Security in the Slovak Republic, September 29, 2010. Available at
- BP: Statistical Review of World Energy June 2011. Available at
- European Commission: Natural Gas Market Indicators. Available at
- Ibid. ↩
- European Commission: Directive 2009/28/EC on the promotion of the use of energy from renewable, April 23, 2009. Available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009L0028:EN:NOT ↩
- European Commission: Citizens’ summary. EU climate and energy package. Available at
- Visegrad countries and Russia, May 7, 2010. Available at
- Eurostat 2007 ↩