The European Union needs a fundamental transformation of its energy sector to give Member States a sense of security and access to energy at competitive prices. This is the most important conclusion of the panel discussion entitled ‘Completing Europe - From the North-South Corridor to Energy, Transportation and Telecommunications Union’, held on April 21st during the European Economic Congress in Katowice.

The panellists, representing European energy markets and public institutions, supported the proposal to establish the North-South Corridor, as recommended in a report of Central Europe Energy Partners (CEEP) and the Atlantic Council.

The key recommendation included in the report is to set up interlinked energy, transport and telecommunications networks in Central Europe. In the opinion of the CEEP and the Atlantic Council, the North-South Corridor should interconnect the Baltic, Adriatic and Black Sea regions. The key element of the Corridor would be a gas pipeline with a capacity of 15bn cubic metres, together with LNG installations, leading from Świnoujście to the Croatian island of Krk. Equally important would be interconnections in the Balkans, reaching Serbia, Macedonia and Bulgaria among others, and an East-West gas corridor running from Germany through Poland to Ukraine.

The North-South Corridor is essential both for energy security and diversification of energy sources in Europe.

"As Central Europe Energy Partners, we understand very well that access to cheap energy is one of the key drivers of economic growth. CEEP members include both energy producers and energy-consuming industries, which is why we actively work to strengthen the position of consumers on the energy market. An energy transmission network, transport roads and telecommunication links spanning an area from the Baltic Sea to the Adriatic and Black Seas would considerably enhance the security of supplies thanks to infrastructure through which countries would be able to tap into new sources of gas, oil and electric power. This highly complex project would require the involvement of and coordination between numerous partners. Therefore, we need decisive action at the EU rather than merely regional level. Support of the process by means of available instruments of community financing should be reinforced, with the full commitment from European financial institutions," said Paweł Olechnowicz, President and CEO of Grupa LOTOS S.A. and Chairman of CEEP’s Board of Directors.

Ties between Western and Central Europe should be strengthened not only through treaties and political action, but also through investment in energy infrastructure.

"We must not stop in the effort to build a coherent, free and secure Europe. Completion of a single European market is the cornerstone of this vision. The challenges we are facing go beyond mere coherence at the political and regulatory levels. We also need infrastructure to strengthen the ties between the economies of Central Europe as well as those between them and Western Europe. The North-South Corridor is the core of this vision. Once built, the Corridor would bring a number of strategic benefits for the EU and the entire transatlantic community. In addition to integrating the economies of Central and Western Europe, it would improve Europe's energy security through diversification of energy supplies. The Corridor would also boost Europe's economic competitiveness and make it more resilient to crises. What is more, the efficiency brought on by the project would aid Europe in achieving its climate policy objectives," commented Ian Brzezinski, Senior Fellow at Brent Scowcroft Center on International Security, Atlantic Council.

The projects included in the report are in line with Juncker's EUR 315bn investment plan and the goals of the Energy Union.

"The aim of the Energy Union is to ensure access to secure, sustainable, competitive and affordable energy for all consumers across the European Union, both households and businesses. To achieve this goal, we need to transform the fundamentals of Europe's energy system. Such transformation must encompass not only the legislative framework, but also the ageing infrastructure, which no longer meets the requirements of the market. Moreover, there are still so-called ‘energy islands’, or energy-isolated countries which are not properly connected with the neighbouring states. While driving up costs for consumers, this situation also creates a security gap on the energy market. Therefore, the North-South Corridor can become one of the pillars on which Europe's energy security would rest. By interconnecting the markets of Central Europe with one another and with Western Europe, the Corridor would substantially improve the security of supplies and strengthen the EU's internal market," said Dominique Ristori, Director General, DG Energy with the European Commission.

The major challenge is to persuade Member States to assign a priority status to the North-South Corridor project.

"More than ten years after the biggest ever EU enlargement, the integration is still ailing, with energy and other resources unable to flow freely where they are needed. Western Europe had more than half a century to become successfully integrated, including with respect to infrastructure interconnections. The countries of Central and Eastern Europe which joined the EU after 2004 still have plenty of slack to take up to become linked to the West and along the strategic north-south axis. We need the North-South Corridor to connect the Baltic, Adriatic and Black Sea regions, and to bring together the entire EU and our neighbouring countries into an Energy Union, i.e. a single and coherent internal market. A market supporting the development of industry and creation of new jobs, while offering lower energy prices to consumers," commented Prof. Jerzy Buzek, Chair of the European Parliament Committee on Industry, Research and Energy.

In the North-South Corridor project, key emphasis is put on infrastructure in the energy sector.

"As an owner of power infrastructure, we realise the responsibility and understand our role in the unification of markets to create new opportunities for our businesses and benefits for people in the entire region," noted Davis Virbickas, CEO at Litgrid, the Lithuanian operator of the electricity transmission system.

The North-South Corridor would stimulate the creation of a single gas market and enhance the security of gas supplies in the region.

"Through the Corridor gas would be freely transported from the LNG terminal in Świnoujście via the extensive network in Poland and interconnections with Slovakia and the Czech Republic further on to Hungary, to connect the European transmission system with a proposed LNG terminal on the Croatian island of Krk. Poland's stretch of the North-South Corridor would include complex internal infrastructure in the west, south and east part of the country. The project would effectively connect Poland's gas grid with the systems in the neighbouring countries and provide access to the global LNG market to gas consumers in Poland and other CE countries. From the point of view of GAZ-SYSTEM S.A., the region's major transmission system operator, development of the North-South Corridor as part of the company's investment plan would make it possible to entirely change the structure of gas supplies to Poland and technically feasible to transport gas through Poland to other countries in Central and Eastern Europe," commented Jan Chadam, President of the Management Board of GAZ-SYSTEM.

We are witnessing strong fluctuations on the global oil markets amid severe political instability in many regions of the world.

"Secure access to energy is what the European economy needs in the first place to remain competitive in the face of newly emerging threats. Gdańsk is on the path towards that goal. Here, on the Baltic coast, PERN Przyjaźń is building a state-of-the-art oil terminal, which will not only enable full diversification of offshore hydrocarbon supplies via Naftoport, but in a few months may become the first real step (in the area of oil logistics) in the development of the North-South oil route from the Baltic to the Mediterranean Sea. This solution would secure supplies for the entire region while taking the region's competitiveness on the global market to a new level," said Dariusz Zawadka, Vice-President of PERN Przyjaźń.

The total cost of strategic projects under the North-South Corridor concept amounts to approximately EUR 50.5bn, of which EUR 27bn is the cost of energy-related projects (oil, gas and electricity), EUR 20bn − of transport-related projects, and EUR 3.5bn − of telecommunications projects. This amount is but a fraction of the EU budget for infrastructure investment until 2020 as proposed by the European Commission, which amounts to EUR 1,500-2,000bn (an average of 150-200bn per year). This means it would take only a third of the EU's annual budget for infrastructure development to ensure Europe's strategic, long-term energy security.