Nicholas Newman Petroleum Review June 2016
Historically, the economies, politics and energy sectors of the Baltic States – Estonia, Latvia and Lithuania – were highly dependent on their powerful neighbour, Russia. Between 1990, the year of their independence and 2003, when they joined the European Union, these countries remained very dependent on Russia for their energy imports. Their electricity infrastructure was still separate and distinct from neighbouring EU member states- a condition often described as the Baltic `Energy Island’
To reduce and ultimately free themselves from their reliance on Russian energy, and to demonstrate their membership of the EU, the European Commission has initiated a number of energy infrastructure projects designed to create new direct gas and power links between the Baltic states and neighbouring EU states. These are primarily Finland, Sweden and Poland, and the objective is to gain the benefits of competition through diversity of supply and economies of scale from this enlarged power market. The alarming example of Gazprom’s market behaviour towards Ukraine has stimulated the Baltic States’ quest for integration with the power networks of its EU neighbours and underpins the policy of seeking energy security through diversity of supply. However, despite significant EU investment, Russia still supplies about a third of the Baltic States’ power needs and, until the opening of the Lithuanian Klaipėda LNG port in 2015, all supplies of natural gas.
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