Remarks of Kadri Simson in the Industry Committee of the European Parliament on the energy situation in Europe
We are facing a full scale war on the European continent. A war against a partner of the Union. A country which has gone a long way in implementing reforms, not least in the energy sector. A country that deserves all the support of the Union against an unprovoked and unjustifiable violent aggression.
The Commission is actively working on ensuring that Ukraine can maintain stable electricity and gas supplies despite the war. Yesterday I sent a letter to all energy ministers in the EU explaining how we will coordinate urgent supplies to Ukraine in the energy sector. During the Energy Council on Monday, many Member States pleaded for immediate assistance to Ukraine as well.
I am in constant contact with Minister Galushenko. We are regularly updated on the situation on the ground. And despite some regions being cut off from electricity and gas, both the power and gas infrastructures continue to operate steadily.
Over the last years, we have already done a lot to contribute to the energy security of Ukraine through reverse flow of gas, including from Hungary and Slovakia this winter, with discussions ongoing for possible extension to the next heating seasons. This is now of a crucial importance.
Another crucial issue concerns the synchronisation of the Ukrainian power grid with that of continental Europe – a strategic project for Ukraine’s energy diversification and autonomy from Russia.
Exactly a week ago, at midnight, Ukraine has decoupled its electricity grid from the Russian electricity grid for an isolation mode test. This was already planned a long time ago and dramatically has coincided with the military aggression. The test went well and reasonably proved that the Ukrainian system can successfully operate on its own.
In the current situation, Ukraine has decided not to link their grid back to Russia. So, in my discussion with Minister Galuschenko on Sunday I expressed my full political support to early synchronisation of the Ukrainian and Moldovan grid with Continental Europe. It was supposed to happen under normal circumstances next year.
Meanwhile, ENTSO-E has set up a task force to assess these risks and identify the necessary measures. Based on that, they will ensure emergency synchronisation with Ukraine.
I believe this decision would be a tangible sign of Europe’s solidarity and a reason for hope for Ukraine.
Finally, I am also following very closely the nuclear safety situation together with ENSREG.
Of course this unfolding crisis will impact European energy markets and security of supply.
The High Representative and the Commission proposed a very strong response, including a robust set of economic sanctions, and we coordinated them closely with our partners, the US, UK and other allies. Furthermore, the Commission proposed removing a number of Russian banks from the SWIFT system and paralysing the Russian Central Bank, which has shown strong effects already.
As in 2014, EU sanctions do not target directly trade in energy commodities, but include a ban on exports on specific refining technologies. This will make it harder and more costly for Russia to upgrade its oil refineries. These technologies are built in Europe and they cannot be easily replaced globally by other suppliers.
So we will see that, over time, there will be a depletion of revenues from the refined oil that in 2019 generated 24 billion euros of revenues for Russia.
Against this background, we know that our own energy markets remain very tight.
Ultimately, our preparedness relies on our ability to substantially and effectively diversify supplies from our current main supplier and to fill in our gas storage capacities before the next winter begins.
Turning to the gas market, LNG would need to play a key role to replace the missing pipeline gas. Therefore, the Commission has been in touch with both alternative pipeline and LNG suppliers to explore all avenues for additional supplies. There is a clear willingness to help from our trusted partners.
Finally, beyond the risk of a security of supply shock, we must also address the risk of a price shock.
As you know, the Commission is working on measures that could be taken in the short- and medium-term. We will present this in the form of a Communication next week. And now I will listen attentively today to your expectations and interests.
Let me just add that the Commission stands ready to propose extraordinary measures in case of an escalation of prices that threatens our social and economic resilience.
In this context, I would like to urge the Parliament also to accelerate the examination of the December proposal.
On 15 December 2021, the Commission proposed an amendment to the Gas Security of Supply Regulation to reinforce the security of gas supply framework, with targeted measures to better coordinate storage and enable joint procurement of strategic stocks, as well as strengthening solidarity between Member States. In the current context, it is therefore crucial that the December package is adopted as soon as possible.
I want to conclude with one political remark on the meaning of this energy crisis for Europe.
We are faced with multiple challenges which seem to point to the same direction: security of supply, affordable energy and climate change. Our best option to address them is delivering on resilience, diversification and energy transition.
It has become painfully clear that we cannot afford to leave to any third country the power to destabilise our energy markets or influence our energy choices.